Statesville Flour Mills Co. v. Wayne Distributing Co.

Walker, J., after stating the case: The defendant contends that the plaintiff broke the contract by overcharging on one item as indicated in the above statement. It is plain, we think, that if this was a breach at all, it was not such a one as justified the defendant in canceling the contract. It seems to have been the result of a misunderstanding as to the nature of the shipments, and as soon as plaintiff discovered its mistake, in a very small amount, it agreed to rectify it, by giving the defendant credit for the amount, with leave to deduct it from the next invoice. What else could plaintiff have done? Defendant then owed it more than enough to cover the amount of the discrepancy and was fully protected, had plaintiff been insolvent, and was doubly protected if it had complied with the contract, as it had the right and the express permission to deduct the amount from the next invoice. Why the defendant should have drawn for the amount, when it was indebted to the plaintiff in a larger amount, requires more explanation than has been given. But upon well settled legal principles the defendant was in the wrong, apart from the question of good faith, in canceling the contract. The doctrine is well expressed in 9 Cyc., p. 650: “When there are .several terms in a contract, a breach committed by one of the parties may be a breach of a term which the parties have not, upon a reasonable construction of the contract, regarded as vital to its existence. Such a term is said to be subsidiary, and a breach thereof does not discharge the other party. He is bound to continue his performance of the contract, but may bring an action to recover such damages as he has sustained by the default.” In a case much cited on this point it appeared that the plaintiff, a professional singer, had entered into a contract with defendant, director of *712 an opera, for bis services as a singer for a considerable time, and upon a number of terms, one of which was that plaintiff should be in London without fail at least six days before the commencement of his engagement, for the purpose of rehearsals. Plaintiff broke this term by arriving only two days before the commencement of the engagement, and defendant treated this breach as a discharge of the contract. The Court held that, in the absence of any express declaration that the term was vital to the contract, it must look to the whole contract and see whether the particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the plaintiff a thing different in substance from what the defendant has stipulated for; or whether it merely partially affects it and may be compensated for in damages, and the Court held that the term did not go to the root of the matter, so as to constitute a condition precedent. Betini v. Gye, 1 Q. B. D., 183.” To the same effect, Clark on Contracts, 457; 3 Elliott on Contracts, sec. 2045, and 3 Page, sec. 1450, where the rule as to divisible and subsidiary promises is thus stated: “It is not the breach of every covenant of a contract that may operate as a discharge of the adversary party. To have this effect, the covenant broken must be a vital term of the contract, breach of which makes performance impracticable, and the accomplishment of the purpose of the parties impossible. Breach of a minor and subsidiary covenant may give rise to an action for damages, but it cannot operate as a discharge.” And again, in the same section: “Where a contract to ship goods under the vendee’s form of charter party is broken only by using another form of charter party which omits a clause that if the vessel is freed from wharfage during discharge of cargo, freight is to be reduced 4% pence per ton, the party not in default must perform, and sue for damages if he has suffered any.” Withers v. Moore, 71 Pac. (Cal.), 697. Another apt illustration, where the facts were similar to those before us, will be found in 3 Elliott on Contracts at sec. 2046, it being there said: “Neither is there a fatal breach in cases where the nonperformance of one of the conditions does not materially impair the benefit from the performance of the others and the loss occasioned by the breach of the particular condition is capable of compensation in damages. It is not the theory of this principle that on failure of performance in an unimportant particular that the party benefited should enjoy these benefits and render no compensation for them. This principle is abundantly illustrated in cases where contractors for construction of buildings have, in good faith, substantially but not literally complied with the specifications. In these cases where the damages are slight, so that an allowance out of the contract price will give the owner substantially what he contracted for, the breach does not discharge the entire contract.” As remarked by *713 Tindal, C. J., in Stavers v. Curling, 3 Bing., N. C., 355, the rule has been established by a long series of decisions in modern times, that the question whether covenants or stipulations of a contract are to be held dependent upon or as independent of each other is to be determined by the intention of the parties as it appears on the instrument, and by the application of common sense to each particular case, and to this intention, when once discovered, all technical forms must give way. See Leonard v. Dyer, 26 Conn., 172; Ritchie v. Atkinson, 10 East, 295, and numerous authorities cited in notes to text-books which we have cited. The defendant received proper credit for the overcharge in this case, and this was all that he could reasonably demand. Withers v. Moore, supra. It would be contrary to reason and a reproach to the administration of justice if for so slight a breach, if substantial breach it was, we should hold the defendant to be altogether discharged from further performance of this contract. The parties may by their language make a term have the force and effect of a condition precedent, but there is no such expression in this contract. The determination of the other question, as to the deduction from the damages of the amount of the freight for carriage from Statesville to Goldsboro, it seems to us, must also and equally be against the defendant. It is perfectly evident what the parties meant by the stipulation as to freight, which was to be deducted from the invoices of actual shipments. “The price of flour was based on delivered shipments, including freight, the price per barrel. . . . Flour is all sold delivered; the seller pays the freight and it is deducted from the invoice,” said plaintiff’s witness. The defendant’s testimony does not contradict this statement, but rather tends to corroborate it. B. C. Thaxton said that “On the invoice sent they deducted the freight; they drew for the amount of the invoice, less the freight.” This meant nothing more or less than that when a shipment was made and the goods were actually transported, where there would be freight charged, the plaintiff should pay the freight to Goldsboro, and the amount should be taken from the total of the invoice. There would be no freight where there was no shipment, and, of course, no invoice to be deducted from. The reason plaintiff allowed this credit on the amount of the invoice was because it had already paid the freight through Statesville to Goldsboro, and the railroad company would refund to plaintiff the amount so paid for defendant under the “milling-in-transit” arrangement, which is well understood, and is fully explained in the evidence. Any other construction of the contract would plainly contravene the real intention of the parties, and might result in a sale of the flour below the market price. *714 Tbe court gave proper instructions as to tbe measure of damages: tbe difference between tbe contract price and tbe market price at tbe place of delivery. Heiser v. Mears, 120 N. C., 443; Clements v. State, 77 N. C., 142; Hosiery Co. v. Cotton Mills, 140 N. C., 452, 454. We find no error in tbe record. No error.