Roberts v. Tuttle

105 P. 916, 36 Utah 614

• Court: Utah Supreme Court
• Decided: December 10, 1909
• Docket: No. 1999
• Status: Published

Opinion

MeCAJtTY, J.

(after stating the facts as above).

The first question to be determined is, What were the respective rights and obligations of appellants and defendants under the agreement signed by them, and which it set out ih. full in the foregoing statement of facts ? This agreement; among other things, provides that: “Tuttle Brothers furnish good1 title to said property for not exceeding $2650 on the following terms of payment, to-wit, three hundred dollars cash in hand paid} and the balance in monthly installments of twenty dollars per month with seven per cent interest.” It is contended by counsel for respondents that, under the agreement, appellants were required to pay twenty dollars per month on the principal of the purchase price, and in addition thereto to pay monthly the interest on all deferred payments, and, not having done so, they defaulted, and are therefore only entitled to recover the amount paid on the purchase price with legal interest. On the other hand, appellants claim that up to the time the judgment of eviction was rendered against them, and they were thereby dispossessed' of the property, they performed every duty required of them by the terms of the contract, and that they are not only entitled to recover the money paid by them on the purchase price, but are also entitled to recover for all losses sustained by them because of respondents’ want of authority from the owner of the property to make the contract in question. Under the construction contended' for by counsel for respondents appellants would have been required to pay $33.71 as the first installment, instead of twenty dollars as, provided in "the contract, and the same amount, less about 11 cents, as the second installment, and so on until the final payment was made, the amount of ' interest payable each month gradually growing less in proportion to the reduction made on the principal by the monthly payments. True, it may be said that by a strained construction the interpretation contended for by respondents’ counsel might be given the contract, but we think the more fair and reasonable construction is that appellants were only required to pay twenty dollars per month on the balance of the purchase price, inclusive of interest (Root v. Johnson, 99 Ala. 90, 10 South. 293), and that the general rule of partial payments should apply in this case. This is the interpretation the parties themselves gave the contract, and seventeen monthly installments of twenty dollars each were paid by appellants and accepted by respondents under this construction. In fact, the record conclusively shows that both appellants and respondents, from the time the contract was executed until the commencement of this action, intended to and did so construe it. Where parties to a contract, regarding which there may be doubt or uncertainty as to its proper construction, have, with knowledge of its terms, 1 given it the same practical construction, and where, as in this case, they have by their acts given effect to such construction, the construction thus adopted will generally be adhered to by the courts in giving effect to its provisions. In 9 Cyc. 588, the general rule is stated as follows:

“Where the parties to a contract have given it a particular construction, such construction will generally he adopted by the courts in giving effect to its provisions. And the subsequent acts of the parties, showing the construction they have put upon the agreement themselves, are to be looked to by the court, and in some cases may be controlling.”

Many cases are cited in the footnote in support of this doctrine. (2 Paige on Contracts, sec. 1126; Bishop on Contracts, see. 412; School District v. Davis, 76 Neb. 612, 107 N. W. 842; Stewart v. Pierce, 116 Iowa 733, 89 N. W. 234; Fiscus v. Wilson, 74 Neb. 444, 104 N. W. 856; Keith v. Electrical Co., 136 Cal. 178, 68 Pac. 598; Kennedy v. Lee, 147 Cal. 596, 82 Pac. 257; Dist. of Columbia v. Gallaher, 124 U. S. 505, 8 Sup. Ct. 585, 31 L. Ed. 526; Topliff v. Topliff, 122 U. S. 121, 7 Sup. Ct. 1057, 30 L. Ed. 1110; McLean County Coal Co. v. City of Bloomington, 234 Ill. 90, 84 N. E. 624.) Applying the rule as 2 declared by these as well as many other authorities that could be cited, to the undisputed facts of this ease, it necessarily follows that appellants were at no time in default, and therefore cannot be held to have breached the .contract.

The next assignment of error discussed by the parties involves the question of the measure of damages which appellants are entitled to recover from respondents because of the latter’s inability to perform their part of the contract, which the record shows was due solely to their want of authority to sell the property on the terms therein specified. Appellants contend that they are not only entitled to legal interest on the $640 paid by them to the defendants on the purchase price, but are entitled to recover for the repairs and improvements made by them on the property, the amount of the judgment rendered against them in the ejectment suit, mentioned in the foregoing statement of facts, the $178.60 expended by them in defending the suit, and for the loss of their bargain, and that the court erred in striking out the evidence offered in support of these elements of damages and limiting the amount of their recovery to the $640 paid on the purchase price, and legal interest thereon. On the other hand, respondents contend' that performance on their part was made conditional, and the extent of their liability, in case of nonperformance, was fixed by the following provisions of the contract, namely: “Providing Tuttle Brothers furnish good title to the said property for not exceeding $2650, on the following terms of payment, to-wit: Three hundred dollars cash in hand paid, and the balance in monthly installments of twenty dollars per month, with seven per cent, interest. . . . Title to said property to be marketable, ... or this payment to be refunded.” They then proceed to argue that, because Mrs. Denny refused to convey the property in accordance with the terms of the contract, to which she was not a party, and the making of which she did not authorize, they were therefore unable to furnish appellants with a marketable title, and are thereby absolved from all liability except to repay (as liquidated damages) the money which they had. received on the purchase price. We do not think the contract is open to this construction. The terms “good title” and “marketable title,” as used in the contract, undoubtedly 3 refer to the record title, or chain of title, as shown by the public records, and not to respondents’ authority or want of authority from the owner of the property to make the contract, and it is plain that it was not intended tbat the repayment of the three hundred dollars forfeit money, with interest thereon, should be considered as liquidated damages for any and all losses that appellants might sustain because of respondents’ want of authority to make the contract. We think a fair and reasonable construction of these provisions of the contract is that they were intended to give appellants a right to demand a marketable title to the property, and to refuse any title that might be tendered that was not marketable, and to relieve them from making any further payments on the property, and to entitle them to a repayment of the three hundred dollars forfeit money in case the record title should prove to be unmarketable. True, it may be said that if respondents had acted within the scope of their authority, and were unable to furnish appellants with a good title because of some defects in the chain of title, the only claim appellants would have under such circumstances would be for the money paid by them on the purchase price, with interest. But that is not this case. Appellants were furnished an abstract of title of the property soon after they went into possession, which, was entirely satisfactory to them, and on the strength of this they in good faith made valuable improvements on the property, and paid seventeen monthly installments of twenty dollars each on the purchase price. The difficulty here is, while the record shows that respondents were authorized by Mrs. Denny to contract for the sale of the property on certain terms, they had no authority to make the contract in question, and they, in effect, admit in their answer that they had no such authority.

It is further argued in behalf of respondents that, as appellants were advised at the time they entered into the contract that respondents were not the owners of the property, but were acting as agents-for another party (whose name was not disclosed) they acted with their “eyes open,” and with the understanding that respondents might be unable to furnish a marketable title,, and hence assumed the risks of the deal. While appellants must be deemed to have entered into the contract with the understanding that respondents might be unable to furnish a marketable title because of some cloud or defect that might appear in the chain of title, and that respondents’ promise to furnish a good title was subject to this contingency, they were not bound to 4 take notice that the respondents in making the contract might be without authority to act from the owner of the property and make investigation respecting what authority, if any, respondents had to make the contract, and especially so in view of the fact that the name of the owner was not known to appellants until after the contract was entered into and they had taken possession of the property and paid a part of the purchase price. They had a right, under the circumstances, to assume, and to act upon the assumption, that respondents had authority from their principal to make the contract.

Furthermore, respondents contracted in their own names, and there is nothing in the agreement that even suggests that they were “acting as agents for another 5 party. Therefore1, under all the authorities, they are personally liable thereon. Now, the rule as laid down by the great weight of authority seems to be that, where an agent undertakes to act for a principal without authority, or exceeds his authority, even though he in good faith, but erroneously, believes he has authority to act, he is responsible to the other contracting party for the damage he may sustain because of such want of authority.

liechem, in his excellent work on Agency, sec. 550, says;

‘"Where the promise is made in. the name of the principal and. as his contract, the better opinion is that the agent cannot he held liable upon it, but only for the deceit or breach of warranty, even in the case of a written contract, where the assumed relation of agency appears upon the face of it. Some courts have, indeed, manifested a disposition in this latter case to reject the words referring to the alleged principal as mere surplusage, and to hold the agent liable upon the remainder as upon his own contract. This, however, as has been well said, is rather to malee a new contract for the parties than to construe the one which they have made for themselves.. Where, however, the agent, in undertaMng, without authority, to bind another, used apt words to bind himself, there is abundant reason and justice in holding him liable upon the contract itself as made.” (Italics ours.) *

In 3 Sutherland on Damages (3d Ed.), the author, in discussing the measure of damages in such cases says, at section 798:

“The same sum which the agent without authority had agreed for in hehalf of his solvent principal will be the sum recoverable against him, or as it has been otherwise expressed, “the person who contracts with the agent is entitled to be put in the same position as if the representations’ made by the agent concerning his authority were true. In other words, where upon an executed consideration a certain sum would he due from the supposed principal if he had been bound by the contract and solvent, that sum is recoverable from the unqualified agent.”

And in section 797 of the same work the author says:

“The damages proper include the value of the property sold, or of the services rendered by the procurement of the agent unqualified to bind the supposed principal; and, if an abortive suit has been prosecuted on the contract on the faith of its being binding against such principal, the costs of it are recoverable as part of the damages.”

To tbo ame effect are tbe following authorities: Pumpelly v. Phelps, 40 N. Y. 59, 100 Am. Dec. 463; Hopkins v. Lee, 6 Wheat. 109, 5 L. Ed. 218; White v. Madison, 26 N. Y. 117; Weave v. Gove, 44 N. H. 196; Farmers' Co-op. T. Co. v. Floyd, 47 Ohio St. 525, 26 N. E. 110, 12 L. R. A. 346, 21 Am. St. Rep. 846; Dunshee v. Geoghegan, 7 Utah 113, 25 Pac. 731; Story on Agency (9th Ed.), secs. 263, 267, 269; 1 Parsons on Contracts (7th Ed.), secs. 65, 67, 69; 2 Page on Contracts, sec. 975; 1 Am. & Eng. Ency. L. 1124, 1125; 31 Cyc. 1545, 1551, 1555. We also invite attention to the notes to Thompson, v. Davenport, 3 Smith’s Leading Cases (9th Ed.), 1648, wherein some of the questions here involved are elaborately discussed and numerous cases cited. Hopkins v. Lee, supra, was a case in which the measure of damages in this class of cases was to some extent involved, and in the course of the opinion it is said:

“The rule is settled in this court that, in nan action by the vendee for a breach of contract by the vendor, for not delivering the article, the measure of damages is its price at the time of the breach. The price, being settled by the contract, which is generally the case, makes no difference, nor ought it to make any; otherwise the vendor, if the article have risen in value, would always have it in his power to discharge himself from his contract, and put the enhanced value in his own pocket. Nor can it make any difference in principle whether the contract he for the sale of real or personal property, if the lands, as in the case here, have not been improved or built on. In both cases the vendee is entitled to have the thing agreed for, at the contract price, and to sell it himself at its increased value. If it be withheld, the vendor ought to make good to him the difference.”

In tbis ease tbe record shows that while respondents were authorized by Mrs. Denny to sell the house 6 and lot mentioned, they had no authority to sell it on the terms specified in the agreement under consideration. Therefore appellants, under the well-established rule as declared by the foregoing authorities, were entitled to recover, for the money paid by them on the purchase price, with legal interest thereon, the value of the improvements made by them on the premises, the costs and expenses which they incurred in defending the ejectment suit mentioned, which the parties have stipulated to be $178.60, and for the loss o-f their bargain. The measure of damages for the loss of their bargain, under the peculiar facts and circumstances of this case, would be the difference between the contract price ($2650) and the market value of the property (less the value of the improvements referred to and pleaded as an item of damage) at the time the judgment of eviction was rendered against appellants; this being the date (June 30, 1906) when it was determined that respondents had no authority to sell the property on the terms specified' in the contract and it became apparent that there could be no performance on their part. (Dunshee v. Geoghegan, supra; Close v. Crossland, 47 Minn. 498, 50 N. W. 694; Hendrickson v. Back, 74 Minn. 90, 76 N. W. 1019 ; 3 Sutherland on Damages "[3d Ed.], sec. 798.)

Appellants offered evidence to show that between the months of May and July, 1905, and after they had paid several monthly installments on the property, they, at the solicitation of respondents, borrowed the balance of the purchase price at an. expense of $35, and tendered the same to respondents, and that respondents refused to accept the same. The ruling of the court in sustaining objections male to the admission of this evidence is assigned as error. Ordinarily damages of this character are not recoverable because of their remoteness. In this case, however, as we have observed, appellants predicate their right to recover upon the ground that respondents had no authority to make the contract in question, or to sell the property on the terms therein mentioned. And it is alleged in the complaint that, after appellants had paid part of the purchase price, and respondents had put them into possession of the property, they borrowed the money at the request of, and upon the representations made by, respondents “that if they (appellants) should borrow the balance of the purchase price and tender the same to defendants as agents, said Denny would accept the same and . . . convey said property to plaintiffs;” that appellants relying upon the representations so made by respondents, borrowed the balance of the purchase price at a cost of thirty-five dollars and tendered the money to respondents, who refused to accept the same, and that the cost of obtaining the money was “a useless and unnecessary expense” to appellants. Now, if, as alleged in the complaint, respondents represented to appellants that Mrs. Denny would be obligated' to convey the property to appellants provided she were tendered the balance of the purchase price, and requested appellants to borrow the money for that purpose, and appellants, in pursuance of such representations and request, borrowed the money and tendered it to respondents, and they refused to accept the same, we know of no reason why appellants are not entitled to recover the reasonable 7 cost and expense, if any, which they incurred in obtaining the loan. Under the peculiar facts and circumstances of this case we think this was a proper element of damages. The proof offered by ^appellants on this point had a direct bearing upon, and tended to prove, this item of damages, and the ruling of the court in refusing to admit it was error. We are of the opinion, however, that, under the pleadings and evidence, appellants are not entitled to recover for tbe item of $412.50, the amount of the judgment rendered against them in the ejectment suit for the use of the premises occupied by them,. and for which they received the benefit.

The judgment is reversed, with directions to the trial court to grant a new trial and to proceed in accordance with the views herein expressed; costs of this appeal to be taxed against respondents.

STRAUP, C. J., and FRICK, J., concur.