Buffalo & Lancaster Land Co. v. Bellevue Land & Improvement Co.

Hardin, P. J.: Manifestly this action is for specific performance of the agreement set out in the complaint, and was so treated by the parties and the trial court. Upon all the proofs and allegations of the párties a question was presented for the trial court to exercise a - judicial discretion as to whether there should be a specific performance of the contracts alleged in the complaint or not. (Rochester & Kettle Falls Land Co. v. Roe, 8 App. Div. 367.) A similar doctrine was laid down in Dunckel v. Dunckel (141 N. Y. 434), and in Frain v. Klein (18 App. Div. 65). In Stokes v. Stokes (155 N. Y. 590) Martin, J., said: “ The right — 540 — of specific performance rests in the judicial discretion of the court, and may be granted or withheld upon a consideration of all the circumstances and in the exercise of such discretion. (Citing cases.) It is a well-established principle relating to this subject that specific performance will never be decreed where it would be inequitable. It is immaterial whether the fact that it is inequitable arises from the provisions of the contract or from external facts or circumstances which affect the situation and relations of the parties, for in either case it may constitute a sufficient ground for a court of equity to withhold this peculiar relief, and to leave the parties to their legal remedy.” (Citing cases.) In Trustees of Columbia College v. Thacher (87 N. Y. 317) Danforth, J., said: “It certainly is not the-doctrine of courts of-equity to enforce by its peculiar mandate every contract, in all cases, even where specific execution is found to be its legal intention and effect. It gives or withholds such decree according to its discretion, in view of the circumstances of the case, and the plaintiff’s prayer for relief is not answered, where, under those circumstances, the relief he seeks would be inequitable, * * * If for any reason, therefore, not referable to the defendant, an enforcement of the covenant would defeat either of the ends contemplated by the parties, a court of equity might well refuse to interfere, or if in fact the condition of the property by which the premises are surrounded has been so altered ‘ that the terms and restrictions’ of the covenant are no longer applicable to the existing state of things. * * * And so, though the contract was fair and just when made, the interference of the court should be denied, if subsequent events have made performance by the defendant so onerous that its enforcement would impose great hardship upon him, and -cause little or no benefit to the plaintiff.” In Story’s Equity Jurisprudence (§ 751a) it is said : “Courts of equity will also, in allowing or denying a specific performance, look not only to the nature of the tra/nsaction, but also to the character of the parties who have entered intp the contract.” , And in section 769 that same author says: “ We have already seen that the specific execution of a contract in equity is á matter, not of absolute right in the party, but of sound discretion in the court. Hence, it requires a much less strength of case on the part of the defendant to resist — 541 — a bill to perform a contract than it does on the part of the plaintiff to maintain a bill to enforce a specific performance.” And in section 742 he says: “In truth, the exercise of this whole branch of equity jurisprudence, respecting the rescission and specific performance of contracts, is not a matter of right in either. party; but it is a matter of discretion in the court; not, indeed, of arbitrary or capricious discretion, dependent upon the mere pleasure of the judge, but of that sound and reasonable discretion which governs itself as far as it may by general rules and principles; but, at the same time, which withholds or grants relief, according to the circumstances of each particular case, when these rules and principles will not furnish any exact measure of justice between the parties.” The evidence .delivered at the Special Term satisfactorily establishes that the defendant had built, maintained and operated the road in accordance with the provisions of the contract until December, 1894, and the three following months in 1895. Apparently, the expenditure had been $150,000 to bring into existence the railroad in compliance' with the conditions of the agreements that the railroad should be constructed ; and it seems that, after it was constructed, it was operated in strict accordance with the terms of the contract until the storms prevented in the four months mentioned; and subsequent to those months the railroad was operated in accordance with the terms of the agreement down to the time of the trial, which occurred on the 10th of May, 1897. The evidence given at the trial satisfactorily supports the 20th finding, to wit, “ That it was practically impossible for the said Bellevue Land and Improvement Company to operate the said electric street railway during the winter of 1894-5, pursuant to the terms of the agreements dated June 1, 1892, and March 1,1893.” The evidence also satisfactorily establishes that the plaintiff sustained no damage by reason of the non-operation during those months of the road. Indeed, the plaintiff did not become aware of the obstructions and inoperation until October, 1896, when it was seeking an opportunity to avoid its obligations. It is contended in. behalf of the respondent that the obligation on the part of the defendant by force of the language of the ■ agreement of March 1,1893, is absolute and unqualified to run cars every half hour from seven a. m. to eight-p. m., under all. conditions and — 542 — circumstances, until the .plaintiff shall have sold the land which it purchased; and it, therefore, relies upon the doctrine laid down in Harmony v. Bingham (12 N. Y. 99); Beebe v. Johnson (19 Wend. 500); Tompkins v. Dudley (25 N. Y. 272) and Ward v. Hudson River Building Co. (125 id. 230). Those cases related to contracts which, in their terms, were absolute and without any qualification, and were so treated in the adjudications made in respect to them. However, there are numerous cases where courts have implied a condition in a contract where a performance of it had, without' the fault of the party, became impossible. Such were the cases of Dexter v. Norton (47 N. Y. 62); Lorillard v. Clyde (142 id. 456); Stewart v. Stone (127 id. 507). In searching for the intention of the parties at the time they used the language in respect to the building, maintaining and operating of the railroad and the times when cars should be run, force must be given to all the language used, including that which expressly declares “ as such street railroads are usually run until said land is sold';” and that language is to be construed in the light of all the circumstances surrounding the parties at- the time of the execution of the contract as well as the purposes to be accomplished by the construction, maintenance and operation of a street railroad. (D., L. & W. R. R. Co. v. Bowns, 58 N. Y. 573; Russell v. Allerton, 108 id. 288.) When the parties used the language they were contemplating a suburban railroad, and it is not unreasonable to suppose, that they contemplated that such railroad should be operated as railroads of that character are usually operated in the neighborhood of the locality of the one provided for. Doubtless the words “ every half hour from 7 a. m. to 8 p. m.” related to the schedule that the road was to adopt in the operation of its cars, rather than to a pur-' pose of making an imperative undertaking on the part of the defendant that its cars should thus be run in defiance'of all obstacles or hindrances that might occur. It was understood by the parties that railroads adopt schedule time, and that there are, from sundry causes, embarrassments and difficulties which are encountered by street railroads in observing schedule time; and, hence, it is apparent that, with that thought in mind, the parties used the words “as such street railroads are usually run ” to indicate the extent and.nature of the obligation to be assumed by the contracting party. The con — 543 — struction suggested seems to be such as to give rise to the supposition that that would accomplish the purpose of the parties, and to harmonize with the practical situation. The construction suggested would serve “ the convenience of' passengers,” which seemed to be one of the purposes of bringing the railroad into, existence. In this case there was no willful or intentional departure from the usual course of operating suburban railroads by the defendant. The findings warrant the conclusion, as did the evidence, that the defendant made diligent efforts to operate the road without interruptions; and the findings also warrant the conclusion that the respondent’s lands were not affected by the interruptions caused by the excessive storms of December, 1894, and the three following months of 1895. Indeed, there is an express finding that " no damage appeared by the evidence to have been caused to any person interested in said land' by the failure of the Bellevue Land and Improvement Company, or the company owning or engaged in the operation of said street railroad, to run cars on said railroad when it was obstructed or blocked with snow or snow drifts.” In Town of Mount Morris v. King (77 Hun, 18) it was held that a “forfeiture is not favored by law, and the provisions of an agreement upon which it is based must be strictly construed.” In the course of the opinion delivered by Haight, J., it was said in respect to an agreement then under consideration, that its stipulations were not intended to cover “ trifling breaches of the contract that might be made in many ways, such as the failure to keep the road or some particular part thereof in as high a state of repair as the officers of the town might think it should be in,” and that the special language used was to be read in connection with the whole contract. If we turn to the exact language of the contract, we find that it is a stipulation that, in case said street railway shall not be constructed, maintained and operated as hereinbefore provided, the said party of the first part will, at the request of the party of the second part, take back the said land. There has not been á failure to construct, to maintain or to operate the road. As already suggested, the road was built at an expense of some $150,000. It was maintained by a large expenditure of money and it was operated from the time it was opened down to the time of the trial, except the — 544 — period when the. storms interfered for some four months. We think that that interruption was not such a breach of the contract as was contemplated, by the' parties at the time they entered into the agreement upon which reliance is placed for the right to have a court of equity enforce the alternative provisions of the contract. (Kimbull v. West, 15 Wall. 379.) The foregoing views lead to the conclusion that the decision of the'trial court should be reversed. Adams and. Ward, JJ., concurred; Follett and Greef,. JJ.,. dissented in favor of an affirmance on the opinion of Woodward, J., delivered at Special Term.. The following is the opinion delivered by Woodward, J., at the Special Term: Woodward, J.: This action was brought for the purpose of compelling the defendant to a specific performance of the alternative covenants of a contract, upon the ground that the party was in default, and that it had failed to perform certain specific covenants going to the essence of the contract. It was tried in connection with four other actions brought by the defendant against the plaintiff for the foreclosure of a .certain mortgage, the real question at issue being the same in each' case. It was established on the trial that the Bellevue Land and Improvement Company was in 1892 the owner of a considerable tract of land situate about half way between the village of Lancaster and the city of Buffalo, both in the county of Erie, about five miles distant from either place, and south of the village of Depew. On the 1st day of June, 1892, the Bellevue Land and Improvement Company entered into a.contract in writing with Charles L. Woodbridge, Walter Hanford, Thomas Christie, Timothy Hogan & Sons, Cassine G. Wilson, J. Lester Woodbridge, Eugene Klein and Frank K. Roberts, agreeing to sell a portion of its land to the parties named for $600 an acre, amounting to $71,136. It was agreed that a portion of this purchase price should, be paid in. definite sums at certain specified times, and that the remainder should be secured by a bond and mortgage. The real estate involved-in this transaction was, at the time, farm land, worthy in its then; — 545 — condition, in the neighborhood of $200 per acre. As an inducement to the purchase of this land at the advanced price, the Bellevue Land and Improvement Company covenanted, among other things, that it would “ guarantee that an electric street railroad shall be constructed, maintained and operated, connecting with the street railroad system of the city of Buffalo, and running thence to the village of Lancaster, and that it shall run in and along said avenue (to be dedicated by the party of the second part, the plaintiff in this action), when located, and that the construction of the said road shall be commenced on or before the 1st day of July, 1892, and that the same shall be completed and in operation on or before the 1st day of May, 1893, and that said street railroad shall be maintained in good condition and in operation until said land shall be sold by said second parties, and that cars shall be run thereon for the convenience of passengers after its completion as often as once every half hour, from 7 a. m. to 8 p. m.” It was also covenanted that “ should said party of the first part fail to cause such street railroad to be constructed, maintained and operated as hereinbefore provided, it agrees to take back from said second parties the land hereby contracted, provided said land shall be free and clear from all liens and incumbrances, except said mortgage and taxes and assessments, levied or assessed thereon after this date, and to repay them all moneys which they may have-paid on this, contract or on the said bond and mortgage, and to discharge said mortgage and to surrender to them said bond,- and it further agrees to pay said second parties $5,000, which it is hereby agreed shall be full liquidated damages for such failure.” On the 1st day of March, 1893, the parties above mentioned, having in the meantime been duly incorporated under the name of the Buffalo and Lancaster Land Company, and having paid $15,556 of the purchase money, a new contract, understood to embrace substan-. tially the same conditions, was entered into between the Bellevue Land and Improvement Company, the defendant, and the Buffalo and Lancaster Land Company, the plaintiff. This new contract recites that the party of the first part has heretofore entered into a-contract with the parties above named, “ whereby the party of the first part guarantees and agrees that an electric street railroad shall be constructed and operated over said land as will, by reference to said agreement, more fully appear ; and, — 546 — “ Whereas, the parties to said agreement of the second part have received from the parties of the first part a conveyance of said land, and are about to convey the same to said party of the second part (The Buffalo and Lancaster Land Co.). “ Now, this agreement witnesseth, th at in consid er ation of the premises and the sum of one dollar, paid by the party of the second part to the party of the first part, and for other good and valuable considerations, the party of the first part agrees, in case the parties to said agreement of the second part shall make the conveyance herein-before recited, that an electric street railroad shall be constructed, maintained and operated, connected with the street'railroad system of the city of Buffalo, and running thence to the village of Lancaster, and that the said railroad shall run over said land and in and along a certain street or highway 100 feet wide, as the samé is now located, which street or highway runs in a direction parallel, or nearly parallel, to the northerly line of said land; that said street railway shall be completed and in operation on or before the 1st day of May, 1.893; that said street railway, shall be maintained in good condition and in operation until the said land shall be sold by the party of the second part, and that .after the completion of said railroad, cars shall be run- thereon for the convenience (conveyance in the original contract, following the language of the statute) of passengers as often as once every half hour, from 7 a. m. to 8 p. m. of each day, as such street railroads are usually run, until said land is sold. " ' '“The party of the first part further covenants that in case said street railway shall not be constructed, maintained and operated as hereinbefore provided, the said party of the first part will, at the request of the party of the second part, take back the said land, provided the said land shall be free and clear from all liens and incumbrances, except a mortgage made by the parties to said agreement, of the second part, to the party of the first part, to secure the payment of the sum of $55,580, which mortgage bears even date here- ’ with, and except, also, taxes and assessments levied or assessed thereon since the 1st day of June, 1892, and except, also, any incumbrances upon said land or any defect in the title thereto' of the party of.the second part which- existed at the time of the delivery of the deed to the parties to said agreement of the second — 547 — part; and thereupon the party of the first part will repay to the party of the second part all money Avhich has or may be paid to the party of the first part, pursuant to the terms of said agreement, and all moneys which may have been paid on said mortgage or the bonds to secure .which the same is given, and all money which may have been paid on account of taxes or assessments, levied or assessed upon said premises since the 1st day of June, 1892, and will pay to the party of the second part the further sum of five thousand dollars ($5,000), which it is hereby agreed shall be full liquidated damages for the breach of the foregoing covenant for the construction, maintenance and operation of said street raihvay, and the party of the first part will thereupon, at the request of the party of the second part, discharge said mortgage.” The plaintiff in this action received from the defendant a conveyance of the land in question, dedicating the land for the highway as provided in the original contract, paying upon the contract a sum aggregating $30,572.16, executed and delivered the bond and mortgage and generally complied in good faith with all the conditions of the contracts. The defendant made the transfer of the property, accepted money at various times, received the bond and mortgage, and constructed, maintained and operated the street railroad in accordance with the agreement; except that during the Avinter of 1894-1895 unusually heavy snows, accompanied by high winds, blockaded the highway to such an extent that for some days no cars were run over the line involved in this action, though the defendant company, through its employees, exerted itself in the effort to operate the road to an extent Avhich fairly relieves it from any imputation of having willfully neglected its duties under the contract. The question is, therefore, purely one of laAv. This court is called upon to decide whether the defendant, company, having entered into a covenant with the plaintiff to operate its cars “ as often as once every half hour, from 7 a. m. to 8 p. m. of each day, as such street railroads are usually run, until said land is sold,” can be absolved from that agreement in a court of equity,, and be alloAved to foreclose its mortgage against the plaintiff, subjecting him to the risks inseparably connected Avitli such a transaction when prices have suffered a sharp decline, and when the market for large tracts of speculative real estate is concededly inactive. It. is substantially — 548 — agreed' on the part of both parties, and it is in accord with the authorities, that both ■ of the contracts involved in this action are but a single transaction; that they are to be construed together, and that the intent of the parties is to be gathered from the reading of each óf the instruments in its relation to the other. Thus viewed, there can be no doubt that the defendant company, made up of business men of large experience, did covenant with the plaintiff in this action to construct, maintain and operate a street railroad over the lands purchased by the plaintiff; ‘and that, in addition to the obligation which such railroad owed to the State to operate its cars in a reasonable manner for the accommodation of the public, the defendant company - undertook, -without exception, to run its cars “ as often. as once every half hour from 7 &. m. to 8 p. m._ of each day,” and the clause, “ as such street railroads are usually run,” has reference to the equipment, and to such incidental delays as might prevent the operation of its cars upon the exact schedule time, and cannot be construed to modify this ■ express agreement to run the cars as often as every half hour. . -In such a case it is no part of the duty of a court of equity to interfere to relieve the defendant from the specific performance of its covenants. “ In the first place,” says Mr. Justice Stoby, in his Equity Jurisprudence (13th ed‘. p. 104) “ in matters of positive contract and obligation, created by the party (for it is different in obligations of duties-created by law), it is no ground for the interference of equity that the party has been prevented from fulfilling them by accident-, or that he has been in no default, or that he has been prevented by accident from deriving the full benefit of'. the contract on his own side. Thus if a lessee on a demise covenants to keep the demised estate in repair, he will be bound in equity as' in law to do so, notwithstanding any inevitable accident or necessity by which the-premises are destroyed or in jured ; as if they are burnt by lightning, or destroyed by public enemies, or by any other accident, or by overwhelming force., The reason.is, that he might have provided. for such contingencies by his contract if he had so chosen; and the law will' presume an intentional general liability where he has made no exception.” That the parties to this contract understood! the nature of the obligations into which they-were entering, and that they were aware of — 549 — this general rule of law, is evidenced by the numerous exceptions in. respect to the covenant to receive ■ back the land contained in the second contract, and which are not to be found in' the first agreement. It was important to the purchasers of this property; indeed, it goes to the very essence of this contract, that there should be a street railroad prepared, not only to discharge its obligations to the State, but to afford intending purchasers an opportunity to reach the city of Buffalo at short and regularly stated intervals. This was one of the inducements which the Buffalo and Lancaster Land Company was to hold out to its customers; it was to enter into their contracts with individual purchasers, thus becoming identified with the land, and constituting a part of the property rights of the community which it was hoped to establish upon this purchase. If such a contract cannot be enforced, or, in the event of failure, if the alternative covenant is not to become operative, because of some accident against which the party has not provided, then there is no use of entering into specific agreements. This was to a certain extent a speculative contract, entered, into by two companies organized for the purpose of dealing in real.estate. The value of the land under consideration depended very largely upon the construction and operation of this railroad, with special reference to the degree of comfort, speed and certainty with which intending purchasers might reach the city of Buffalo, which presumptively afforded the means of a livelihood for the greater part of such community, as it was expected would be centered upon this plot. For the purpose of giving this speculative value, and thus to induce. the plaintiff company to purchase the' property at a large advance upon its value as farm land, the defendant company waived the rights of a street railroad company under the'laws and usages of this State, and specifically covenanted to run its cars “ as often as every half hour, from 7 a. m. to 8 p. m. of each day,” and failing to do this, it promised to restore the plaintiff to the position which it occupied on the day of entering into this contract, and to pay the sum of §5,000 as liquidated damages. “ Equity,” says Mr. Justice Story, “ may compel parties to execute their agreements, but it has no authority to make agreements for them or substitute one for another;” and the defendant company having deliberately entered into a contract, one of the covenants of which it has failed to keep, there can be no doubt — 550 — ' that the plaintiff in this action is entitled to a. decree for the specific performance of the alternative covenant. This is neither a new nor novel construction of the law; it is sustained by the highest authorities both in American and English jurisprudence, as well as by important considerations of public policy. In the case of Dermott v. Jones (2 Wall. 1) the defendant in error entered into a contract to construct a house on the premises of Hiss Dermott, agreeing to build it according to the detailed plans and specifications furnished by Hiss Dermott’s architect, and to supply" all matters requisite for the execution of the work, .“ in all its parts and details, and-for the complete finish a/nd fitting for use and occupation of all the houses and buildings, and the several apartments of the house and buildings, to be erected pursuant to the plan of the work described and specified in the sañd schedule / and that the' work, and the several parts and parcels thereof, shall be executed, finished and ready for use and occupation, and be delivered over, so finished and ready,” at a day fixed. Jones built the house according to the plans and specifications, except as they were modified by Hiss Dermott, but, owing to inherent qualities of the soil, the foundation sank, the building became badly cracked, and, consequently, dangerous and uninhabitable. Hiss Dermott caused the building to be torn down in part, and rebuilt upon an artificial foundation or float, and it thus became a perfect building. Jones having sued Hiss Dermott in the Federal court for the District of Columbia for the price of the building, her counsel asked the court to charge that she was entitled-to “ recoup ” the amount which it was necessary for her to expend, and this the court refused to do. The case went to the United States Supreme Court, and Hr. Justice Swayite, delivering the opinion of the court, said : “ The defendant.in error insists that all the work he was required to do is set forth in the specifications, and that, having fulfilled his contract in a workmanlike manner, he is not responsible for defects arising from a cause of which he was ignorant, and which he had no agency in producing. “ Without examining, the soundness of this proposition, it is sufficient to say that such is not the state of the case. The specifications and the instrument to which they are annexed constitute the contract. They make a common context, and must be construed — 551 — together. In that instrument the defendant in error made a covenant. That covenant it was his duty to fulfill, and he was bound to do whatever was necessary to its performance. Against the hardship of the case he might have guarded by a provision in the contract. Not having done so, it is not in the power of this court to relieve him. Tie did not make that part of the building ‘ fit for use and occupation.’ It could not be occupied with safety to the lives of the inmates. It is a well-settled rule of law that if a party, by his contract, charge himself with an obligation possible to be performed, he must make it good, unless its performance is rendered impossible by the act of God, the law, or the other party. Unforeseen difficulties, however great, will not excuse him.” (Paradine v. Jane, Aleyn, 26; Beale v. Thompson, 3 Bos. & Pul. 420.) After citing various analogous cases, the court says: “ The principle which controlled the decision of the cases referred to rests upon a solid foundation of reason and justice. It regards the sanctity of contracts. It requires parties to do what they have agreed to do. If unexpected impediments lie in the way, and a loss must ensue, it leaves the loss where the contract places it. If the parties have made no provision for a dispensation, the rule of law gives, none. It does not allow a contract fairly made to be annulled, and it does not permit to be interpolated what the parties themselves have not stipulated.” In the case of Beebe v. Johnson (19 Wend. 500) the plaintiff had deeded to the defendants a certain right to make and vend a machine, for threshing grain, agreeing to perfect the patents in England so as to protect the purchaser in his right to make and sell the machines in the province of Canada. It transpired that the laws of England forbade the granting of such a patent to a citizen of a country other than Great Britain or its provinces; and the plaintiff sued the defendant for the purchase money, contending that, as the laws of England prevented him securing the English patents, he was not obliged, to perform this covenant. The court, -in discussing this case,' said that “ if the covenant be within the range of possibility, however absurd or improbable the idea of the execution of it may be, it will be upheld ; as where one covenants it shall rain to-morrow, or that the Pope shall be at Westminster on a certain day. To bring the . case within a rule of a dispensation, it must appear that the thing — 552 — to be done cannot, by any means, be accomplished; for, if it is only-improbable or out of the power of the oblig’or, it is not, in law, deemed impossible. * * * If a party enter into an absolute .contract without any qualification or exception, and receives from the party with whom he contracts the consideration of such- agreement, he must abide by the contract, and either do the act or pay damages; his liability arising from his own direct and positive undertaking.”" In the ease of Harmony v. Bingham (12 N. Y. 107) where the defendants covenanted for a given price to deliver certain freight .within a given time, and failed to do so, the .court, delivering its opinion through Judge • Edwards, say: ‘ It is a well-settled rule that, where the law creates a-duty or a charge, and the party is disabled from performing it without any default in himself, and has no remedy over, then the law will excuse him; but where 'the party, by his own contract, creates a duty or charge upon himself, he is bound to make it good, notwithstanding any accident or delay by inevitable necessity, because he might have provided against it by contract. * * * This rule has been uniformly followed, and that, too, even in cases in which its application has been considered by- the court as attended with great hardship. The only exception which has ever been acknowledged, is where a party has contracted to do a thing which the law considers impossible.” - In the case of Cobb v. Harmon (23 N. Y. 148) the defendant sought to be relieved from liability on a bond, which was given to insure one Herrick applying for an assignment of all his. property, and for a discharge as provided in the 12th section of the act to abolish imprisonment for debt, and to diligently prosecute the same until he should secure a discharge, on the ground that he had failed because of the absence of the county judge at the time of the return .of a certain process. There were other questions involved, but in passing upon this point, Judge Lott, delivering the opinion of the court, said: “ If it be conceded that the performance of the condition of the defendant’s bond became impossible by the non-attendance of the county judge at the time and place appointed for making the application therein mentioned, and thereby agreed to be made, they are nevertheless liable. It is a settled rule of law that where a party, by his own contract, absolutely engages to do an act, — 553 — or creates a duty or charge upon himself, he is bound to make it good, notwithstanding any accident or other contingency not foreseen by, or within the control of, the party, unless its performance is rendered impossible by the act of God, or of the law of the obligee; but where the law creates a duty or charge, and a party is disabled from performing it without any default in himself, and has no remedy over, then the law will excuse him.” In the case of Tompkins v. Dudley (25 N. Y. 272) the defendants became the surety for one Chambers, who entered into an agreement to construct a school house and to deliver it over ready for use on the 1st day of October, 1857. The building was not completed on that date, and on -the fifth day of October, and before it was completed and turned over, it was destroyed by fire. ' Judge Davies, in delivering the opinion of the court, says: “ The builder, in the present case, by his own contract, created a liability and incurred a duty, which the defendants guaranteed he should perform, and which he has not performed. In ’justification of such non-performance, he alleges the destruction of the building by fire an inevitable accident, without any fault on his part. The law is well settled that this is no legal justification for the non-jierformance of the contract. This subject was most carefully considered and elaborately discussed in the case of Harmony v. Bingham (2 Kern. 99), and it .was then held by this court that when a party is prevented by the act of God from discharging a duty created by the law, he is excused; but when he engages unconditionally, by express contract, to do an act, performance is not excused by inevitable accident or other unforeseen contingency not within his control.” “These principles,” says Judge Davies, in the same case, “have been applied by the Supreme Courts of Massachusetts, Connecticut and New Jersey, in cases almost entirely analogous to the one now under consideration.” Judge Miller, in delivering the opinion.of the court in the case of Wheeler v. Connecticut Mutual Life Ins. Co. (82 N. Y. 550), says that, “ while, as a general rule, where the performance of a duty created by law is prevented by inevitable accident, without the fault of a party, the default will be excused, yet when a person by express contract engages -absolutely to do an act not impossible or — 554 — unlawful at the time, neither inevitable accident nor other unforeseen contingency not within his control will excuse him, for the reason that he might have provided against them by his. contract.”’ In the case of Howell v. Long Island R. R. Co. (37 Hun, 381) the railroad company had entered into a contract with the following covenant; “ And .the said parties of the second part, for themselves,, their successors and assigns, do hereby covenant that they will erect within a reasonable time, at a cost of not less than $500, a respectable station-house on the lot of land hereby conveyed,, and forever keep and maintain the same as a regular daily stopping place (Sundays excepted) for not less than two trains daily in each direction,, under the penalty of $3,500, which is hereby agreed between the parties as the liquidated damages for the substantial non-performance of this covenant.” The cáse was argued before the General Term of the second department, and Justice Bernard, in delivering-the opinion of the court, says: “ The covenant applied to the plaintiff’s land and can be performed in no other place fully. The .defendant’s road, with which the contract was made, was a road of very much greater scope and significance than the short road. Togo from the new station by this road east, the traveler must first go to-Hunter’s-Point, a distance of three miles, and then again start by the-defendant’s road. * * * The parties had the. right to contract to suit themselves, and a court should give proper weight to that-fact. Finally, the defendant is not bound to the plaintiff to keep-even the new station at all for any given time. It is for its interest-to do so at present, but it may move it or discontinue it. . A covenant with-the plaintiff is not answered by a performance in another place and with no guaranty of continuance. It seems to me, therefore, that there is not only -no substantial performance, but a complete non-performance as to this covenant. The case does not- fall within the cases cited. Generally, these cases arise in actions upon contracts for building and like contracts. If the performance issubstantia], and the defect can -be made good with money,, the action is upheld and justice done by compensation for defects.” This case, which was affirmed by the Court of Appeals without an opinion (107 N. Y. 684), following the lines of previous cases,, holds that there is no substantial compliance with the covenants where the terms of the contract, in their relation to both parties, — 555 — are not carried out; and the fact that the Bellevue.Land and Improvement Company operated its cars according to the terms of its contract, except at, such times as it was prevented from so doing by the rigors of winter, cannot be construed to be a substantial compliance with the covenant. The parties making the contract knew the kind of weather they were likely to encounter in the operation of their road; and they were equally aware that, the property would not be worth one-half the price which it then commanded, except for the guaranty that the railroad would be continued iu active operation at all times within the hours specified,, thus enabling residents of the locality to go to and from their business in the city of Buffalo. While it is probably true, as contended by the defendant, that, during the time the road was blockaded, there was no inconvenience to passengers, the question is not modified by this fact. If the road could default when there were no passengers, without becoming liable to the alternative covenants of the contract, it might do so at any time; there could be no passengers, in the strict use of that word, as applied to transportation companies, unless there were cars to convey them; and it was of the-essence of this contract, not that the convenience of passengers-should be considered, but that the plaintiff company should be able to-guarantee to its customers that they should have a means of going to and coming from the city of Buffalo “ as often as once every half hour, from 1 a. m. to 8 p. m. of each day,” and there could be no-substantial compliance with that covenant except by actually running-its cars upon such a schedule each day. In the recent case of Ward v. Hudson River Building Co. (125 N. Y. 234) the court, speaking through Judge Gray, set forth the law clearly in reversing the judgment of the Special Term and in sustaining the General Term. The facts in the case are sufficiently outlined in Judge Gray’s opinion, in which he says: “The appellant seeks to excuse the failure to perform his agreement, and to be-legally absolved from the pecuniary'loss consequent thereupon; by invoking the application of an equitable rule- which relieves from a penalty and from forfeiture, whenever performance has been rendered impossible by the act of God; by which expression he characterizes the storms and atmospheric disturbances in the State of Uew York and elsewhere, which set in about March 12, 1888, and — 556 — were popularly described as ' The Blizzard.’ We do not think, however, that this is a case for equitable relief, or for any such application of the rule referred to. By the original contracts of the parties, default in the completion of the houses, which were the subject-matter of their making, subjected the contractor to the liability to respond to the owner in a sum measured by the number of days of default, and agreed upon, between them to be in liquidation of all damages.. When the default occurred, the new contract, which followed, did not excuse the plaintiff or. waive his default, but, on the contrary, was an agreement between the parties fixing what the amount of the sum due by way of liquidated damages would be upon a certain date,-and stipulating that it should be due and owing them, if the contractor’s work still remained unfinished. The last agreement has no further bearing upon this matter than to evidence the fact that the continuing default of the contractor Avas not excused, and that if he chose to litigate the question of an excuse by act of God, Avliieh his lawyer advanced, he was at liberty to do so. It was simply an agreement in settlement of the controversies Which had arisen, but Avhich left out of them, for subsequent'litigation, the one question of what is there called the penalty. Whether the sum agreed between parties to be paid in the event of a breach of some agreement is termed by them a ' penalty,’ or ‘ liquidated damages,’ is not controlling upon the question of construction. Their .use of such wmrds is not ahvays conclusive as to their legal meaning;. To get at that Ave must consider ,the subject-matter and nature of the agreement and understand clearly the intention of the parties. If it shall them appear that the damage and loss, which may be presumed to result from non-performance, are uncertain and incapable of exact ascertainment, then the payment or liability fixed by them must be deemed to be liquidated damages and recoverable as such. * * * “Tire damages were.liquidated and the contract made no provision against the result of an interference with its performance by the intervention of occurrences unforeseen and beyond the plaintiff’s control. Having contracted absolutely to complete the houses' on or before a certain date, unforeseen contingencies, no matter of what nature, are not available to plaintiff as a defense to the, exaction of damages.” — 557 — In the case of The Chicago, Milwaukee & St. Paul Ry. Co. v. Hoyt (149 U. S. 1), to which the attention of the court has been invited, the syllabus would seem to indicate a modification of the doctrine so uniformly upheld by the State courts, but a careful reading of the case shows that this is riot intended, and that the case, instead of sustaining the theory of a modification of the rule in respect to a substantial compliance, is decided squarely upon the ground that the contract had been fully complied with, and that the court below was in error in having placed a forced and unnatural construction upon the covenant. The railroad company in this case covenanted with an elevator company in the city of Chicago that the “ total amount of grain received at said elevator shall be at least five million bushels on an average for each year during the term of this lease, and in case it shall fall short of that amount, the said party of the first part agrees to pay to the said parties of the second part one cent per bushel on the amount of such deficiency.” The elevator company, on its part, agreed to take care of 1,000,000 bushels of wheat for the railroad company. The elevator company, doing business for other customers, became crowded for space, and after having received the 1,000,000 bushels of grain from the railroad company, refused to accept more, although it was tendered, and because of this refusal on the part of the elevator company, there was not “ received at said elevator ” the amount of grain which the company had contracted to deliver. The court below held that this was the contract between the parties, and that, in spite of the refusal of the elevator company to accept the grain tendered by the railroad company, the latter was bound to pay the sum of one cent per bushel on the deficiency. The Supreme Court, delivering its opinion through Mr. Justice Jackson (149 U. S. 1), reversed this judgment, not upon the question of law, but upon the facts. Mr. Justice Jackson, after reviewing the facts, says : “ It is thus shown that, in addition to what was actually received, there was tendered by the railway company, at the place and in the manner provided for in the contract, 8,685,269 bushels which the elevators could not accept and did not receive and store. The amount so tendered, with that actually received, exceeded the total amount which the railroad company agreed that the lessees should have the opportunity to accept and store, and this we hold to be a full and — 558 — complete compliance by the railway company with the terms and .true meaning of its covenant.' To hold otherwise would render the railway company liable for the inability of the lessees to accept the. performance that was offered by it.- It would require the clearest and most unqualified understanding on the part of the railway company to subject it to such a liability.” Bead in connection with this statement, and bearing in mind that the court below held the railroad company liable upon the ground that the elevator company had not “ received ” the grain, though it had actually been tendered in good faith, the comments of the court, as cited in the syllabus, cannot be construed to sustain the contention of the defendant in this action. The court said : “ There can be no question that a party may, by an absolute contract, bind himself or itself to perform things which subsequently become impossible, or pay damages for the non-performance, and such construction is to be put upon an unqualified undertaking, where the event which causes the impossibility might have been anticipated and guarded against in the contract, or where the impossibility arises from the .act or default of the promisor. But where the event is of such a character that it cannot be reasonably supposed to have been in the contemplation of the contracting parties- when the contract was made, they will not be held bound by general words, which, though large, enough to include, were not used with reference to the possibility of the particular contingency which afterward happens.” That is to say, where a railroad company enters upon a- contract with an elevator company, agreeing that it shall receive- a certain quantity of grain from its lines, the contract is to be construed that the elevator company is to have the opportunity to receive such an amount, and not that the railroad company shall be obliged to make the company receive what it cannot- receive. The contract was for the benefit of the elevator company; it was interested in being assured of a profitable business, and all that the railroad company or • the elevator company had in mind was the delivery at the elevators of a certain quantity of grain, and this reasonable interpretation was given it by the Supreme Court. There is, no such question involved in the case now under consideration. There is no uncertainty, in the language; it was deliberately entered into to accomplish certain results, and was undertaken in consideration of a large sum of — 559 — money, and there can, therefore, be no question as to the right of the plaintiff in this action ; he is entitled to a decree in accord with the alternative covenants of the contract entered into by the parties •oil a full understanding of the case, and it is so ordered. Judgment reversed and a new trial ordered, with costs to the appellant to abide the event.