Fox v. International Hotel Co.

Adams, J.: On the 10th day of December, 1894, the plaintiff and the defendant entered into a written contract by the terms of which the former was to conduct the defendant’s hotel at Niagara Falls for the term of five years, for which she was to receive an annual compensation of $2,000, and a certain proportion of the net profits of the business. Among its various provisions the contract in question contained the following, viz.: “ It is further understood and agreed that this contract may be terminated by either party, giving to the other three month’s notice before May 1st of any year during the five years above stated. Or at any time, provided a season be kept intact: and by the party so terminating it, paying ($2,000.00) two thousand dollars, cash, to the other party as liquidated damages in full for the termination of the contract.” On the 23d day of January, 1897, the defendant, availing itself of this provision, served a written notice upon the plaintiff that it elected to terminate the contract on the first day of May, following, but it did not pay or offer to pay any damages; and this action is brought to recover the sum of $2,000, upon the theory that the defendant became liable to pay the plaintiff that sum by way of liquidated damages, as a condition of" terminating the contract. "Whatever support there is for this contention must be found in [142] the language of' the provision above quoted, and it is obvious, therefore, that the case requires a construction of that language in order to ascertain, if possible, what was the real intent of the parties. Various rules may be invoked in aid of the interpretation of language which is involved in obscurity, one of which is that effect shall be given, if possible, to every sentence and word of a written instrument. (Bank of Montreal v. .Recknagel, 109 N. Y. 482.) This rule, however is not inexorable. On the contrary, it is one which must always yield in cases where its application produces a result which is not in harmony with the obvious intent of the parties (Clark v. Devoe, 124 N. Y. 120, 125), and that this is such a case we think will be made apparent by a careful examination .of the clause under consideration, in connection with the language which precedes it in the instrument of which it is a part. The first sentence of the clause is perfectly plain and unambiguous. It simply provides that the contract may, at any time during its life, be terminated by either party giving to the other three months’ notice of an intention to terminate the same prior to the first day of May, in any year, and this sentence closes with a period. Then follow these words, which it is claimed involve the entire clause in obscurity : “ Or at any time, provided a season be kept intact: and by the party so terminating it, paying ($2,000.00) two thousand dollars, cash, to the other party as liquidated damages in full for the termination of the contract.” It is to be observed that this sentence is punctuated by a colon after the word “ intact,” which circumstance indicates, within the ordinary rules of punctuation, a design to emphasize a close connection betwe.en the two clauses thus separated, each of which might properly be regarded as forming a complete sentence, precisely as though separated by a period. (Century Diet.) And it is argued from this that the agreement to pay a penalty of $2,000 is qualified by and relates to the termination of the contract permitted by the words “ or at any time, provided a season be kept intact,” and that such is the only construction which will give meaning to every part of the clause. In short, it is contended that the language of the clause, properly interpreted, should read as follows, viz.: “ It is further understood and agreed that this contract may be terminated by either party giving to the other three months’ notice before May 1st of any year during the five years above stated; or [143] at any time, provided a season be kept intact, by the party so terminating it paying two thousand dollars,” etc. Of course, if the clause were thus expressed and punctuated, there •would be little occasion for invoking a judicial construction of the same, for in that case its meaning would be obscured by no ambiguity. But such a construction does not appear to us a natural or proper one, nor one which reflects the obvious intent of the parties ; and such intent, when it can be ascertained from surrounding circumstances, is, as has already been suggested, a controlling factor in the interpretation of contracts, the true meaning of which is to any extent obscured by ambiguity of language. It was said by Chief Justice Tindal, in Glaholm v. Hays (2 Man. & G. 257, 266), that the decision of such a question as is here presented must “ depend upon the intention of the parties to be collected, in each particular case, from the terms of the agreement itself, and from the subject-matter to which it relates.” In Wood v. Sheehan (68 N. Y. 365, 368), Allen, J., refers to the rule just cited as a familiar one, and says: “ Inconsistent clauses must be reconciled, if they may be, and effect given to the intent of the parties as gathered from the four corners of the instrument.” And in Clark v. Devoe (supra) it is said that “ A covenant is simply a contract of a special nature, and the primary rule for the interpretation thereof is to gather the intention of the parties from their words, by reading not simply a single clause of the agreement, but the entire context; and where the meaning is doubtful, by considering such surrounding circumstances as they are presumed to have considered when their minds met.” In the light of this rule let us examine briefly the contract in question and the circumstances under which, it appears to have been executed. It seems that the defendant was the owner of a summer resort at Niagara Falls, known as the “ International Hotel,” and was anxious to secure the services of the plaintiff to conduct the same for a term of years. To this end negotiations were had which resulted in a written proposition being made to the plaintiff, which she thereafter accepted, and it is conceded that the proposition thereupon became a binding contract between the parties. This contract, among other things, provided that the plaintiff should conduct the hotel for the period of five years, with the [144] right to employ a manager and such other servants and employees as were necessary. From the gross earnings of the business thus carried on she was to receive for her services the sum of $2,000 per season, and in addition thereto one-half of the net earnings. Thus it will be seen that the contract in terms secured to the defendant the services of a competent person to conduct its hotel for a long period of time, and to the plaintiff, for her services as such conductor, at least $10,000 in addition to her living; and the contention of the defendant is, in effect, that, notwithstanding this feature of the contract, either party was at liberty to deprive the other of the advantage thus secured without incurring any penalty therefor, provided only that three months’ notice of an intention to terminate the contract were given at any time prior to May first in any year. That it was tire intention of the parties to relinquish the advantages severally secured to them by the terms of this contract without receiving some adequate compensation therefor is simply incredible. It is much more reasonable to suppose that the termination was made possible upon condition that the party terminating it should indemnify the other for the damage • which was certain to ensue, whether the period of actual termination was prior or subsequent to May first. Provision for such a contingency is something which would naturally be considered by parties when entering into a contract like the one under consideration; and it is one which would most likely be made when their minds met. Indeed, we fail to see how any different view can be entertained without disregarding the motives and considerations which ordinarily actuate parties when entering into business relations with each other; and so strongly are we impressed with the idea that such was the real intent of these parties that we feel constrained to hold that the conjunction “and” must be regarded as performing the office of a copula between the first sentence of the clause under consideration and the phrase “ or at any time, provided a season be kept intact; ” and this being the case, it follows that the construction adopted by the learned trial court cannot receive our approval. The judgment appealed from should, therefore, be reversed and a new trial had, with costs to the appellant to abide the event. Hardin, P. J., and McLennan, J., concurred; Spring, J., dissented in opinion; Follett, J., not sitting.