Webb v. Trustees.

CoNNOR, J., after stating tbe case: Tbe terms of tbe proposition made by plaintiff to purchase tbe bonds issued by defendant, “when legally issued to tbe satisfaction of our *303 attorneys,” are plain and unambiguous. Similar provisions are frequently found in contracts for purchasing bonds, loaning money, buying stocks, building houses, purchasing land, etc. They are regarded as both wise and reasonable, and are uniformly sustained by the courts. In regard to the purchase of municipal bonds, the value of which for sale on the market is so largely dependent upon the approval of counsel skilled and learned in the laws controlling their issue, it is a most prudent provision. In the light of the frequent litigation growing out of the issue of such bonds, -often disastrous to holders, to purchase them without some such protective provision would be imprudent and unsafe. However this may be, parties have the legal right to make such contracts, and it is the duty of the courts to give the language a fair and reasonable interpretation. When so interpreted, we can have no doubt that.the approval of the attorneys, as to the legality of the issue, honestly and fairly expressed, was a condition precedent to the completion of the purchase. We may not interpolate into it any other language or give it any other construction. It is uniformly held by the courts that, in the absence of any allegation and proof of bad faith or arbitrary conduct on the part of the person selected to pass upon the validity of the bond or performance of the contract on the part of the person seeking its enforcement, his approval is a condition precedent and is essential to the right to demand performance. It is usually held that when it appears from the pleadings that such provision is a part of the contract, the failure to aver compliance is demurrable. In Young v. Jeffreys, 20 N. C., 357, it appeared that certain persons had made subscriptions for the purpose of building a Methodist Church. The work was to be done according to specifications and accepted by the Commissioners appointed to pass upon it. The objection being made to the payment of the subscriptions that the work had not been. accepted, and *304 that such acceptance was a condition precedent to the payment, Gaston, J., sustaining a motion for judgment by defendants, said: “There is nothing unreasonable, much less illegal, in such a condition. Whether a work of art has been done with proper materials and in a workmanlike style is .an inquiry on which honest differences of opinion may prevail even among persons skilled in the art, and on which men of ordinary pursuits are very unfit to pass. ít is, therefore, in agreements for works of this kind, a prudent and common stipulation for the prevention of controversies that the construction of the work shall be determined by some persons in whose judgment the parties have confidence. If, however, the judgment of the forum appointed by the parties is to be disregarded, or revised by a court and jury, the stipulation is unmeaning.” Wharton Const., 593. If the contract is to be performed to the satisfaction of another, the decision of such person, if honest, is final, no matter how unreasonable. Brown v. Foster, 113 Mass., 136. In Church v. Shanklin, 95 Cal., 626, the contract was made to depend upon the perfecting title to certain property “to the satisfaction of Ohurch & Cory, attorneys.” Patterson, J., said: “The record fails to show that Ohurch & Cory refused to express satisfaction with the plaintiff’s title through any fraudulent or improper motive. * * * It was doubtless the object of the parties to avoid disputes and expensive litigation; certainly some effect must be given to the stipulation contained in the agreement. To hold that the opinion of the Court as to’the validity of the title can be substituted for that of the arbitrators, would defeat the intention of the parties and, in effect, make a new contract for them. This the Court has no right to do. The parties saw fit to make Ohurch & Cory the umpires between them, and if the latter exercised their best judgment in good faith and with an honest intention of determining the question as to the validity of the title, their conclusion is final and binding.” *305 In Mich. Stone, etc., Co. v. Harris, 81 Fed. Rep., 928, tbe same question arose upon the construction of a contract for the purchase of municipal bonds, the language being: “We to furnish you with certified transcript of proceedings evidencing legality of issue to the satisfaction of your attorneys prior to the delivery of same.” Judge Lurton said: “The subject-matter of this contract was the negotiable bonds to be issued for street improvements to be made-under a contract between the city and the plaintiff in error. They had not been issued when this agreement was entered into. It was a most reasonable and prudent thing for proposing purchasers to stipulate for some security against the invalidity of such bonds before being required to receive and pay for them. * * * The plain meaning of this contract was: (1) That plaintiffs in error were to furnish certified copies of the proceedings under which these bonds were issued. (2) Defendants in error were to fairly and honestly submit this record, when furnished, to the judgment of the counsel selected by them. (3) The counsel thus selected must not capriciously and arbitrarily reject tire bonds, but on the record, honestly and fairly give his judgment as to their legality. * * * The buyers employed counsel, a gentleman particularly shilled in the matter of the validity of municipal bonds, and submitted this evidence to him and procured his opinion. * * * The question of the validity of the bonds was to be settled by the opinion of a third person, whose judgment was to be a legal opinion based upon the law and facts touching these bonds. Neither party would be concluded by an opinion rendered arbitrarily and without the honest intent of deciding fairly and rationally. The contract seems to come fairly within the principle applicable to contracts under which settlements between parties are made dependent upon the certificate of some third person. The rule in such cases is that, in the absence of fraud, or such gross misconduct as would necessarily imply bad faith, or *306 tbe failure to exercise an honest judgment, tbe action, of sucb third person should conclude tbe parties.” Kihlberg v. U. S., 97 U. S., 398; Railroad v. March, 114 U. S., 549; Averett v. Lipscomb, 76 Va., 404. There is no suggestion that tbe gentlemen selected by plaintiff’s attorneys to pass upon tbe validity of tbe bonds were not competent or that they did not honestly and in good faith investigate and give their opinion upon tbe question submitted to them pursuant to tbe contract. While we have not undertaken to investigate or express any opinion respecting tbe validity of tbe bonds proposed to be issued, containing tbe twenty-year option, we regard it as sufficiently serious to arrest attention and, in tbe absence of controlling authority, cause counsel to decline to express satisfaction of their validity. Certainly tbe question cannot be said so free from doubt as to suggest an arbitrary refusal to approve them. We do not think that tbe correspondence or negotiation leading up to tbe proposition material. Tbe proposition made by plaintiff and accepted by defendant was tbe result of sucb negotiation, and their relative rights 'and liabilities must be ascertained and declared upon tbe plain and unambiguous language found therein. We concur with bis Honor’s rulings upon tbe several exceptions. Tbe issue submitted to and found by tbe jury, in tbe light of tbe contract, settled tbe right of tbe plaintiff.to tbe relief demanded. Tbe exceptions to tbe answers of Mr. Ware cannot be sustained. Nor was tbe proposed testimony of Mr. Ervin material. Tbe judgment was correctly rendered "upon tbe pleadings, and the verdict must be affirmed. No Error.