Jonesboro, Lake City & Eastern Railroad v. Watts

McCulloch, J., (after stating the facts.) The amount of appellant’s indebtedness to appellee is undisputed, and the contract provides how it shall be discharged. The obligation of appellant under the contract is not, primarily, to pay in money but to transport cross-ties and piling over its railroad at certain stipulated freight rates until its indebtedness to appellee should in that manner be fully discharged. The contract provides for payment in money only in the event of the failure of appellant to perform its contract with reference to payment in freight charges. The contract, according to its express terms, provides for payment in services, and also provides that in the event of refusal of the obligor to pay in that manner the obligee may demand payment in money, so it is plain that, if appellant committed a breach of the contract by refusing payment in services, appellee has the right to recover in money the amount of the debt. Johnson v. Dooley, 65 Ark. 71; Gist v. Gans, 30 Ark. 285; Pierce v. Marple, 148 Pa. St. 69. The contract in this case differs somewhat from the contracts generally found in the adjudged cases on the subject in that it fails to state, expressly, a date for the payment of money in the event of failure to pay in services; but we think the only reasonable interpretation of the contract is that payment in money is recoverable immediately upon refusal to pay in services as stipulated. The last contract entered into between the parties reads that, upon failure of the company to perform its contract, “then it is understood he shall have an immediate right of action against said railroad company upon this bond to the extent and for the amount including damages, if any, to which the said F. C. Watts may be entitled under said contracts and agreements heretofore referred to.” Now, appellee under the contract had ten years from date within which he could require satisfaction of the indebtedness in freight charges, but immediately upon the refusal by appellant to pay in that, manner his right of action for money became complete. Fie was not bound to await the expiration of the ten-year period or to repeat his demand for payment in services. So the only question of fact which we have before us for determination is whether or not appellant has broken its contract by refusing to pay in freight charges in the manner provided in the contract. The issue is succinctly stated by counsel for appellant as follows: “Unless there can be ■ found in the record testimony showing a breach of the contract by appellant — an unjustifiable refusal to render the stipulated services — the decree below is wrong, and must be reversed.” It is urged by appellee that a breach of the contract was first committed by appellant when it refused, in November, 1901, to debit the Sedgwick & Company freight charges against appellee’s account for ties furnished, or to permit appellee to ship ties and apply the freight charges on his indebtedness. This demand and refusal is denied by Mr. Kerfoot, the manager of the railroad, upon whom the demand was made, and who, it is claimed, refused to accede to it, but his denial is unimportant. Appellee’s own testimony shows that Kerfoot gave as a reason for his refusal at that time the pendency of the litigation between Sedgwick & Company and appellee. We think that reason was perfectly sound, and afforded ample justification for refusal at that time either to debit the Sedgwick freight charges or to allow appellee to ship and also debit the freight charges. Sedgwick & Company had sued appellee for a sum of money largely in excess of the amount owing by appellant to him, and had caused appellant to be summoned as garnishee to answer in what sums it was so indebted to appellee. Sedgwick also asserted in that suit all rights absolutely and exclusively under the shipping franchise, as the parties term it. Appellee had repeatedly objected to appellant debiting the Sedgwick freight charges on his account, and had, through his attorneys, in written communications deliberately assumed the position that during the pendency of the litigation neither he nor Sedgwick & Company had any right to use the so-called franchise in any way or enjoy its benefits. Then how can it be said that appellant was not justified, under those circumstances, in refusing to make payments in services whilst the litigation was pending ? Appellant was under summons as garnishee to answer for all its indebtedness to appellee, and dared not discharge it by direct payment to appellee in any manner. To have done so would have been at its own peril and in violation of the writ of garnishment. If that were all, we would have no hesitancy in saying that there has been no breach of the contract by appellant, and that there can be no recovery of money by appellee. But appellant was not so fortunate in its subsequent refusal to pay in services upon demand made by Sedgwick & Company in the letter dated February 27, 1902, which asks permission, upon the consent of appellee, to debit their freight charges against appellee’s account. Appellant not only refused the request,but seems to have assumed the technical position that appellee could get no benefit at all from the shipping contract because of his assignment thereof. It assumed that appellee must own the shipping privileges before he could collect his debt, and that he must lose his debt because he had assigned the contract and could not ship ties and piling. The written assignment indorsed on the contract does not in terms provide that the freight charges on shipment made by Sedgwick should be applied on the debt due appellee from the railroad company, but such is clearly implied from the very nature of the agreement. It is probable that the contract for exclusive shipping privileges was void and unenforcible, though we need not determine that question now. All 'parties treated it as valid, and the assignment of the contract was executed by appellee to Sedgwick, and the same was approved by appellant in recognition of its validity. Now, if the contract for exclusive shipping privilege was valid, and appellee assigned it, as contended by appellant, without any agreement, express or implied, for the application of the freight charges on the Sedgwick shipment on the company’s indebtedness to him, he thus robbed himself of any opportunity at all for the collection of his debt from the company. We can not presume that he intended to do any such thing. Even if we should say that the grant of the exclusive shipping privileges was void, yet, inasmuch as the parties treated it as valid, we must view it in that light in determining what they intended by the execution and approval of the assignment, and must assume that it was not thereby intended that appellee should be deprived of the opportunity of collecting his debt from appellant, which then amounted to a large sum. We should rather presume that the intention was to protect appellee in his rights, and the fact that the consent of the railroad company to the assignment of both contracts was sought and obtained makes it certain that such was the intention. The fact that the parties acted upon that theory, and that for a considerable time, until the disagreement arose between appellee and Sedgwick, the freight charges were applied on the debt of appellee, gives additional force to the presumption that it was so intended at the time of the execution by appellee and the approval by appellant of the written assignments to S'edgwick. Of course, appellee had the right, so far as appellant was concerned, to stop the application of such payments; but as long as he and Sedgwick agreed upon said application, it did not lie with appellant to object. That was the only method provided in the contract for the payment of appellant’s debt to appellee, or rather it was the primary method, and appellant did not have the right to refuse that method without rendering itself liable for payment in money. The refusal of appellant on this occasion to comply with the contract was therefore without legal justification or excuse, and, having refused to pay the debt due to appellee in services as stipulated in the contract, it must pay in money. The chancellor was right in so holding, and his decree is affirmed. Wood J. not participating.