Vickers v. Electrozone Commercial Co.

52 A. 467, 67 N.J.L. 665, 38 Vroom 665, 1902 N.J. LEXIS 146

• Court: Supreme Court of New Jersey
• Decided: June 16, 1902
• Status: Published

Opinion

The opinion of the court was delivered by

Vredenburgh, J.

The counsel of the plaintiff in error, insisting, correctly, that his demurrer craving oyer of the agreement upon which the declaration is founded, and its introduction in full into the record, is the same in effect as if the whole instrument had been stated in the declaration, and draws its entire terms in review, urges that when all its provisions are examined it is “free from ambiguity,” and that the admitted failure of the parties of the second part (represented by him) to order and pay for the designated merchandise does not constitute an actionable breach of the agreement. That this agreement is free from ambiguity will be conceded, but it seems to me to be equally clear its proper interpretation will demonstrate that the failure of the plaintiffs in error to order the goods contracted for constituted an actionable breach of the agreement.

For the sake of clearness in dealing with this assigned, tripartite instrument, it should be borne in mind that, by force of its several transfers, set forth in the declaration, the plaintiff below (Vickers) represents the first parties to the bargain, called the “Electrozone Company,” who were the vendors, and that, by virtue of the “assumption” or “acceptance,” the defendants below (“The Electrozone Commercial Company”) take, the place of the second parties to the compact, the vendees, called therein “Hears” and “Hibbard.” The substance of that agreement can be summarized as follows: The first parties, who were the sole owners of certain patented liquid compounds or disinfectants called “Electrozone” and “Heditrina,” on their part, sold to the second parties, at prices therein fixed, certain quantities of these patented mixtures, and, by the same instrument, -granted to them the exclusive right to sell and distribute them within the territory of the United States. This right was granted to the second parties subject to the restriction that the patented compounds should not be sold by them at prices less than those at which it was then sold by the first parties, except by their consent. The second parties, on the other hand, agreed, in consideration of this territorial monopoly of business so granted them, to order and accept from the first parties and pay to them specified prices for a quantity of not less than one thousand gross of the bottled compounds within a year from the date of the agreement. The agreement regulated the place and manner of the delivery of the goods, the sizes of the bottles, the form in which they might be transmitted to the vendees, and other details not now important to be noticed. So far as considered, the intent of the parties to the agreement cannot be misunderstood. The averments of the count in the declaration demurred to, reduced to their simplest elements, are tantamount to the charge that the vendees agreed to pay the vendors certain prices for certain quantities of goods, sold by the latter to the former, which were ready for delivery, but which the vendees had failed and refused to accept and pay for, with a resultant damage to the vendors to the extent of the first year’s profits they would otherwise have realized from the transaction. A party injured by the repudiation of a contract by the other party also bound by it has an election of remedies he may pursue, one of which is that he may treat the repudiation as putting an end to the contract for all purposes of performance, and sue for the profits he would have realized if he had not been prevented from performing, and the contract would be continued in force for that purpose. Hopk. Sel. Cas. Cont. 578; Lake Shore Railroad Co. v. Richards, 152 Ill. 59; Ryan v. Remmey, 28 Vroom 474; Kehoe v. Rutherford, 27 Id. 23.

The legal sufficiency of these averments, so standing, the plaintiffs in error cannot, and do not, dispute, but they insist in this court that these averments are not supported by the terms of the instrument declared upon when considered in all its parts and as an entirety; that “it contains within itself express provisions for its own discharge — the non-fulfillment of a specified term of the contract,” and that the remedy provided for in case of default in the purchase of the goods by the vendees was “exclusive of any remedy at law against them; that the vendors ‘got rid’ of the contract with the vendees, and would have the untrammelled use of their products to sell themselves or find other contractors.” An examination of the whole agreement will show that the only clause in it which furnishes the slightest basis for this contention is the fifth. Under the third and fourth clauses the vendees had distinctly covenanted, for the space of one year, to order from the vendors, and to accept and pay for, one thousand gross of bottles of this compound, at the price of $20 per gross. What is there in the fifth- clause that can be properly construed as evincing an intention of the vendors to resort to it as their exclusive remedy for default of the vendees, or to surrender or waive the benefit to themselves (the vendors) of the prior covenants for the purchase of the goods and the payment of money to them ? That clause, in substance, provides that if the second parties (vendees) shall fail to order and purchase from the first party (vendors), and pay for during said period, the stipulated quantity of the compounds, that the agreement shall thereupon, ipso facto, and without the necessity of any action by the vendors, became void. But with what consequences ? These consequences are, in the same sentence, expressed to be that all rights and interests thereunder of the vendees (not the vendors) shall be immediately forfeited. It is to be especially observed that the language of this clause does not reach or affect either the rights of the vendors or the liabilities of the vendees under this agreement.

The liabilities of the latter are quite distinguished from their rights. Those rights are regarded, under this fifth clause, as resting within their own volition, and as belonging to themselves, but their obligations under the contract which belonged to others are, properly, not made the subjects of their own voluntary actions. That the fifth clause was intended, in a measure, as self-protective to the vendors against non-performance by the vendees, and as additional, and not substitutional, to their remedy at law, receives support from the language of the seventh clause, which, vice versa to the fifth, affords some self-protection to the vendees, in case of their compliance with the conditions of this agreement, should the vendors, on their part, fail to comply. In the last event, the vendees are given the right to manufacture, for their use,. the designated mixtures, at their own cost, and to sell the same until such time as the vendors should “be able and willing to fill such orders.” Thus the mutual and reciprocal rights and obligations of these two contracting parties, as against each other, were, under this carefully-framed agreement, intended to be safeguarded and fortified through stipulations which were self-enforceable; but there is no expression indicative of an intent to make these reciprocal.remedies exclusive of the legal remedy, or to waive the rights at law for breach of the contract of either party against the other. An intent to incorporate in this paper such a waiver should have been expressed in clear and .explicit terms.

The effect of this contention of the plaintiffs in error, regarded from a practical standpoint, results in a reductio ad absurdum. Is it, in the least degree, probable that these vendors, who were owners of a valuable monopoly and presumably men of affairs, after framing carefully an important sealed instrument, the principal inducement to which must have been the acquisition of substantial profits for themselves out of a business to be carried on in a large territory for an ensuing year of time, and, after stripping themselves of that privilege, would, designedly, by the same instrument, put it in the power of their vendees, during all that period, at will, to defeat the whole object of the compact and escape all liability therefor ? If the plaintiffs in error are correct in their construction of the contract, the vendors have adopted a very ingenious method of strangling their patented novelty in its infancy. They have not only enabled others — probably their competitors in business — to consign the enterprise to business oblivion for at least a year, but they have also most effectually estopped themselves, during the same period, from either earning any profits by their own exertions, or from reaping any benefits through the labors of their vendees. Such business folly, not to say stupidity, will not readily be inferred' to have been within the intention of the vendors. The insistment that the fifth clause furnished the exclusive remedy, in case of default in the purchase, is unreasonable, and is certainly not sus.tained by the express language of that clause, nor is there to be found, in the expressions used in any part of the agreement, any warrant for importing such a meaning into it. Such an interpretation would create a limitation of the liability of the vendees to purchase, in direct conflict with their previous clear and explicit covenants, and should be held void for repugnancy. It will be observed that the construction attempted to be placed upon "the proviso of the fifth clause reading “if the parties of the second part shall fail to order and purchase,” &c., is that such proviso is inconsistent with any personal liability whatever of the defendants below upon their previous covenants to order and pay for the merchandise stipulated for. They thus put themselves within the clear operation of the rule laid down in the well-known case of Furnivall v. Coombes, 5 Man. & G. 736. As was said by Mr. Justice Cresswell, in that case, in giving judgment on demurrer for the plaintiffs against the defendants, “the defendants first enter into a clear personal covenant, and then they endeavor, by the proviso, to relieve themselves from all personal liability.” Chief Justice Tindal, in the same case, said: “The question is whether, taking the covenant and proviso together, the plaintiff has any cause of action,” and (after reading the proviso) added,' “Therefore, if the defendants have entered into a covenant which, to any extent, binds them personally, this proviso is at variance with such covenant, and consequently must be rejected as repugnant according to the authorities cited.” 1 Ad. Cont. (ed. 1888) 297, states the principle thus: “If a man covenants, in his own name, for the performance of some particular act or duty, and then seeks, by proviso, to relieve himself from all liability upon the covenant, the proviso will be rejected as being repugnant to the covenant.” It is not necessary to refer to the authorities cited in Furnivall v. Coombs. That case has been approved in this court in some of its bearings, although not upon the precise points here involved (see Dayton v. Warne, 14 Vroom 659), and also in the Supreme Court. See Booth v. Wonderly, 7 Id. 250, 255. But if there be any merit in the contention that the fifth clause should be construed as showing an intention that the second parties were to be exempt from liability at law for breach of the prior third and fourth covenants of this sealed instrument, the question should- be controlled by, and falls within, the operation of the well-settled doctrine, thus stated in 2 Pars. Cont. (ed. 1860) 26, and Id., (ed. 1873) *513: “So, it is a general proposition that where clauses are repugnant and incompatible, the earlier prevails in deeds and other instruments inter vivos, if the inconsistency be not so great as to avoid the instrument for uncertainty.”

The “inconsistency” in the case in hand (if, indeed, there be any) cannot be claimed to be so great as to avoid the instrument for uncertainty, for the reasons previously pointed out. The proper effect of the fifth clause was to afford the vendors additional protection against default by the vendees, not at all incompatible with the retention of their right to seek damages at law for such default.

Among the cases referred to in the text, in support of this principle, is Hardman v. Hardman, Cro. Eliz. 886. This case was debt upon a bill obligatory, reading “Memorandum that I, John Hardman, * * * do acknowledge myself to owe and do promise to pay to my mother, Agnes Hardman, the sum of £10, * * * for the payment whereof I bind myself, my heirs, executors and administrators, to John Hard-man, the elder, my father.” Hpon demurrer by defendant, it was “adjudged to the plaintiff, and that it was a good bill to Agnes, by the words in the first part of the bill, and -the words which oblige him to John Hardman, Sr., in the last part of the bill, are void.” In a note it is said: “The last clause was rejected because repugnant to the complete obligation already contracted.”

Story Cont., § 660, states the rule as to repugnant clauses in contracts in another form, not dependent upon the mere order of precedence in which they are framed in the instrument, thus: “But whenever one portion of a contract is wholly repugnant to the rest of it, and is irreconcilable with the manifest intention of the parties, as apparent upon a consideration of the whole instrument, it will be stricken out.” Again, in section 661, in speaking of the effect of contradictory stipulations occurring in contracts, lie says: “If the subsequent stipulation contradict and restrict what was distinctly stated, and constituted a principal inducement to Precontract, it will be of no effect.”

There can be no doubt but that the principal inducement to the contract we are considering was the purchase and payment for the patented mixtures, and therefore the case falls clearly within the meaning of the above statement of the law. Clark Cont. (ed. 1894) 589, ch. 10, in giving the subsidiary rules of construction which govern the interpretation of contracts, mentions two which are of some pertinence. He says: “A contract will, if possible, be construed so as to render it reasonable, rather than unreasonable,” and “where it is susceptible of two meanings, will be given the meaning' which will render it valid.”

The construction given by the Supreme Court, in the opinion filed below, to the proviso of the fifth clause, to the effect' that it constituted a grant of an option, in favor of the vendors only, to treat the agreement as voidable, has not seemed to need comment, for the reason that, considering the whole-contract, there is discoverable no ground for the insistment, now urged before this court, that it exhibits an intent of the parties to exempt the vendees from liability at law for breach of their covenants to purchase. If, however, the absence of such an intent is not entirely clear, the eases, relied upon in the Supreme Court, of Doe v. Bancks, 4 Barn. & Ald. 401, and Rede v. Farr, 6 Mau. & Sel. 121, 124, and others there referred to (see, also, Smith v. Miller, 20 Vroom 521, and Creveling v. West End Iron Co., 22 Id. 34), furnish pointed and convincing authority for the principle, then applicable, and sustained by the opinion below, that the legal operation of such a proviso rendered the instrument voidable at the election only of the vendors, and the vendees should not be permitted to take advantage of their own wrong by' failing or refusing to comply.

The question of the plaintiff’s right to recover damages for the failure of the defendants to comply with the agreement beyond the first year therein named is hot before us, .and no opinion is intended to be expressed in regard thereto.

Ho other grounds of error deserving discussion are presented to this court, nor disclosed by the record, and the judgment of the Supreme Court should be affirmed.'

For affirmance — The Chancellor, Chief Justice, Van Syckel, Garrison, Collins, Fort, Garretson, Hendrickson, Pitney, Bogert, Krueger, Adams, Vredenburgh, Voorhees, Vroom. 15.

For reversal — None.