Wiley v. Inhabitants of Athol

6 L.R.A. 342, 23 N.E. 311, 150 Mass. 426, 1890 Mass. LEXIS 295

• Court: Massachusetts Supreme Judicial Court
• Decided: January 2, 1890
• Status: Published

Opinion

Field, J.

The counsel for the defendant, at the argument, waived the exception taken to the ruling of the court in respect to the quality and purity of the water required by the contract. The most important exception is to the refusal of the court to rule that the plaintiff, in order to recover, must prove, as a condition precedent, that during all the time covered by the declaration a sufficient supply of water had been furnished “ to run eight hydrants at the same time, and throw full streams of water over the highest building in either village in said town,” and to the instructions given upon this part of the case.

The presiding justice, apparently, was of opinion that the covenant to “furnish said town at all times with a full and ample supply of water from said hydrants, and from each and all of them, for the purpose of extinguishing fires,” was the principal covenant, and that the guaranty of a sufficient supply “ to run eight hydrants at the same time, and to throw full streams of water over the highest building in either village in said town,” was an independent collateral stipulation, and that if the principal covenant or the guaranty had not been fully performed, this would not defeat the action, but the defendant could recoup any damages which it had suffered as a corporation by reason of the defective performance. The ruling that the guaranty was an independent stipulation was made “ on a proper construction of the contract itself, and on the evidence as to the practical construction put upon it by the parties themselves.”

The evidence was that the contract was executed on June 5, 1876, the selectmen executing it in behalf of the town, and was ratified by the town at a town meeting held on June 13, 1876. Subsequently, at a town meeting held on July 7, 1877, the committee of the town on water supply made a report, and the town then voted to “ accept the waterworks, so far as relates to their use by the town for fire .purposes, in accordance with report of water committee,” etc. This report stated that “ the committee have located for use of the town fifty hydrants, twelve of which are double and thirty-eight single; . . . that they have recently witnessed a trial of said hydrants, with hose attached, nearly all of them proving satisfactory,” and think that, by making certain changes which had been agreed upon, and “ some other changes which the committee may deem desirable, . . . the town will have a very good fire service ” over that part of its territory which is described in the report. The committee recommend “that the town by vote accept the said hydrants, under the terms of the before mentioned contract.” There was evidence that certain changes had taken place in the works since the vote of July 7, 1877, which to an extent greater or less improved “ the efficiency of the works over and above what they originally were.”

The Athol Water Company was incorporated under the St. of 1877, c. 121, and it had purchased all the property of the partnership called the Athol Aqueduct Company, and “succeeded to all the rights and obligations of said firm under said contract.” This action was brought, for the benefit of the corporation, by the surviving partner of the firm of the Athol Aqueduct Company, and “ it was agreed that it was correctly brought as to parties.” The defendant apparently had enjoyed the use of the water down to the date of the writ, at least, which is December 21, 1887, and it had paid for the use of it down to January 1, 1885, a deduction from the agreed price having been made for the half-year ending January 1,1884. The amount claimed to have become due on July 1,1885, has been adjusted in some manner by the parties; and the action is prosecuted to recover for the use of the hydrants from July 1,1885, to July 1, 1887.

The plaintiff offered evidence “ that during the time alleged he furnished, the defendant town at all times with a full and ample supply of pure water from the hydrants referred to in the contract, from each and all of them, for the extinguishing fires, and in accordance with the interpretation of the contract adopted by the court.” The defendant offered evidence “ that the supply of water so furnished was not, during some or all the time covered by the claim, full and ample in quantity, nor pure in quality, for the purpose aforesaid, and according to the construction of the contract adopted at the trial.” There was also evidence “ that the hydrants could not, at any time during the period covered by the claim, comply with the provision as to throwing eight streams of water at the same time over the highest building in either village.”

If the word “ guaranty ” in the contract was used in any technical sense, it must have been used for “ warranty ” or “ warrant,” because there is no contract of a third person which is guaranteed. If it be taken to mean the same as “ warrant,” then the agreement is to warrant that the specified quantity and head of water shall be furnished.

It is said that the English courts make a distinction between a warranty in a contract of sale of a specific chattel when the title passes unconditionally by the contract and the warranty is collateral to the sale, and a warranty in an executory contract of sale, when the title does not pass by the contract. In the latter case, it is said that, by the English law, the buyér may refuse to receive and accept the chattel if it does not conform to the warranty; but that in the former case he cannot, although he may recover or recoup his damages for breach of the warranty. By our law, the buyer can rescind a contract for breach of warranty if the title has passed, and can return the chattel, or refuse to accept it; and if the title has not passed by the contract, he can refuse to accept the chattel, if it does not conform to the contract. See Bryant v. Isburgh, 13 Gray, 607; Morse v. Brackett, 98 Mass. 205. In an executory contract to sell and deliver in the future certain things described in the contract, the things to be delivered must be such as they are described, and a warranty of kind, quantity, or quality in such a contract is only an agreement that the things delivered shall be of the specified kind, quantity, or quality; and if they are not, the buyer can refuse to accept them, because they are not what he has agreed to buy. This is not the rescission of an executed contract by the buyer, but the non-performance of an executory contract by the seller.

In the case at bar, the guaranty may be considered either as defining what should constitute “ a full and ample supply of water,” or as fixing a minimum below which the supply should not be permitted to fall; but upon either construction the plaintiff must furnish the amount guaranteed, in order to perform his part of the contract. It is true, that by the contract the aqueduct company was to furnish hydrants and lay down water pipes, and keep the pipes and works connected with them in repair; but as these things were necessary in order to enable the company to furnish the water, it cannot be held that the defendant would be liable to pay anything for these if the water was not furnished. The furnishing of the water was the principal thing, to which everything else was subordinate. See Bacon v. Parker, 137 Mass. 309. We agree, therefore, with the defendant’s counsel in his contention that the guaranty was in its nature a continuing condition precedent, the performance of which was necessary to enable the plaintiff to recover, semiannually, the price agreed to be paid for the use of the hydrants.

But although conditions precedent must be performed, .and a partial performance is not sufficient, yet when a contract has been performed in a substantial part, and the other party has voluntarily accepted and received the benefit of the part performance, knowing that the contract was not being fully performed, the latter may thereby be precluded from relying upon the performance of the residue as a condition precedent to his liability to pay for what he has received, and may be compelled to rely upon his claim for damages in respect of the defective performance. White v. Beeton, 7 H. & N. 42. Behn v. Burness, 3 B. & S. 751. Jonassohn v. Young, 4 B. & S. 296. Pust v. Dowie, 5 B. & S. 20. Carter v. Scargill, L. R. 10 Q. B. 564. Mill Dam Foundery v. Hovey, 21 Pick. 417, 448. Norrington v. Wright, 115 U. S. 188. Heilbutt v. Hickson, L. R. 7 C. P. 438. See Maryland Fertilizing Co. v. Lorentz, 44 Md. 218; Sampson v. Somerset Iron Works Co. 6 Gray, 120; Kenworthy v. Stevens, 132 Mass. 123; Benjamin on Sale, (4th ed.) 547; Leake, Con. 664.

The foundation of this rule undoubtedly is, that it would be unfair that a party should receive and keep a part of what he has bargained for, and pay nothing for it because he has not received the whole. The technical reason given is, that a covenantee or promisee must be held to.have dispensed with the performance of a condition precedent, as such, if, with knowledge that the condition was not being fully performed, he treats the contract as continuing, and. takes the benefit of a part performance. There are difficulties in the application of the rule, particularly in determining what constitutes such a part performance as will change the condition precedent into an independent agreement. It seems that the performance must be of a substantial part of the contract, and that the acceptance must be under such circumstances as to show that the party accepting knew, or ought to have known, that the contract was not being fully performed.

There is a further difficulty suggested in the present case, namely, that the contract is of such a nature that there is no satisfactory measure of damages, if the full and ample supply of water guaranteed was not furnished. If a full and ample supply was furnished, which yet did not come up to the guaranty, the damages could not be large. If the supply was not full and ample, and not up to the guaranty, the town, unless it had precluded itself by an acceptance of the works, could at any time have given notice to the aqueduct company, and have refused thereafter to receive the water and to accept a part performance of the contract. If the supply, such as it was, was a substantial benefit to the town, and the town continued to receive and use it, knowing that it was less than the company had agreed to furnish, the town ought to pay something for what it has received.

There is a provision in the contract that after the expiration - of fifteen years, and within the- term of twenty-five years, the company will sell and transfer its right, title, and interest in the reservoir, and in the pipes and other property connected therewith, to the town, at a valuation to be determined by three competent and disinterested men. The works are property, and have been treated by the parties as property, the value of which can be estimated. We have no doubt that the value of the use of the hydrants by the town could be estimated by a jury, if the contract, instead of defining the price, had provided that a reasonable price should be paid. If the town has received a supply of water which was found to be useful for the purpose of extinguishing fires, but which was less than the supply which the company agreed to furnish, we have no doubt that it would be competent for a jury to determine the difference in value between the supply actually furnished and that agreed to be furnished. If the town had paid the company the stipulated price, and then had brought suit to recover damages because the supply of water had not been what the company had agreed to furnish, it cannot be said that it would be impossible to estimate the damages. This case, we think, cannot be taken out of the rule we have stated, on the ground that the damages for a breach of the contract could not be estimated, if the guaranty is regarded as an independent agreement.

Although the exceptions do not show that the company furnished, during all the time alleged, a full and ample supply of water for extinguishing fires, yet we think it appears that the supply was such as to be substantially useful for that purpose, and was received and used by the town with knowledge of the deficiency in the supply, if there was a deficiency, and without any intimation to the aqueduct company or to the water company that it refused to receive and accept the water in part performance of the contract. On the facts which appear, we think that the court was right in holding that the guaranty, during the time covered by the declaration, must be treated as having become in effect an independent agreement, for the breach of which damages might be recouped in the action.

The measure of damages was the difference between the value of the supply of water actually furnished, and of that which by the contract should have been furnished, estimated with reference to the uses for which it was furnished. Upon the question of these damages, the exceptions do not state that the defendant offered any evidence, except that the supply furnished was not full and ample, and was not equivalent to the amount guaranteed. The ruling that the damages suffered by individuals in their property, by reason of the failure to furnish the stipulated supply, could not be taken into account, was undoubtedly correct. The court also ruled that the town might “ recoup any damages ” it had suffered as a corporation by reason of the failure to furnish a full and ample supply, and also that it might “ avail itself of the breach of the so called guaranty, and of other independent stipulations in the contract to be performed by the plaintiff, in reduction of the damages.” This ruling is correct, so far as it goes. If the defendant town desired a more specific statement of the nature of the damages which might be recouped, or of the evidence which would be competent to prove such damages, we think that it should have offered evidence, and requested suitable rulings.

It appeared in evidence that in 1882 or 1883 the Athol Water Company laid water pipes towards Cut-Throat Brook, and in 1884 procured the passage of the St. of 1884, c. 189, and after-wards erected a pumping station at Silver Lake, and “ connected it with its aqueduct, but soon abandoned it.” The defendant’s counsel, in reply to an inquiry by the court, stated that he should contend that these acts were an admission by the corporation, and by the plaintiff Wiley, who was then its president, of the insufficiency of the supply as to quantity and quality then being furnished to the town under the contract. The plaintiff’s counsel offered in evidence the records of the meeting of the stockholders of the corporation, “to show, by the votes theré passed, that the object of laying the pipe towards Cut-Throat Brook, and of taking the water of Silver Lake, was to improve the quality, and not to increase the quantity, of water.” The court admitted the record of the votes, “ which recited, in substance, that the object of said acts was to improve the quality of the water.”

The acts of the corporation were not the acts of its president, and we are not clear that evidence of these acts was competent for the purpose contended for by the defendant; but if it was, we cannot say that the records were not properly admitted to show the purpose for which the acts were done. The votes contained a declaration of the purpose of the corporation in ordering the acts done. The declaration of the purpose is a part of the doings of the corporation, by the authority of which, the acts were done. It does not appear that at the time these votes were passed the present controversy had arisen. Apparently it is the common case of declarations accompanying acts which tend to explain or qualify the meaning of the acts, and which are considered as a part of the res gestee.

Exceptions overruled.