Welch v. San Cristobal Central

HamiltoN, Judge, delivered the following opinion: On March 7, 1914, Manuel Antonio Barrióla, after obtain ing permission of the court, filed an intervening petition in this cause, wherein he set out that he was a colono and sublessee of the defendant central, by a contract dated January 27, 1912, of which he attached a copy. That he performed his part of the contract up to September, 1913, but that the central, during [313] tbe preceding month of May, bad failed to malm tbe agreed advances and in September tbe receiver declined to make any.. He admits that be received about $2,000 as refacción under tbe contract, and alleges that be bas planted, under tbe contract, 80 cuerdas of sugar cane land. He asks that tbe contract be declared broken, that be be allowed damages, that an account, be bad of tbe grinding of cane from bis land for 1913 and tbe present crop, and that be be allowed a lien upon tbe produce: of tbe present crop taken from tbe 80 cuerdas in question. This, petition was not formally answered, but was referred to Special, Master J. Henri Brown, and tbe receiver offered testimony in opposition to tbe petition. On July 11, 1914, tbe special master filed a report in which he stated an account, and finds for the petitioner in tbe sum of $605.23, to be paid out of tbe proceeds of said crop in tbe bands of tbe receiver. To this report, on, July 18, tbe petitioner excepted, first, on tbe ground that there were no damages from any breach of contract, and second, that tbe master was in error in reducing the agreed rental from. $12.50 fixed in tbe contract to $10 for tbe time subsequent to. tbe appointment of tbe receiver on August 15, 1913. 1. Tbe exception filed does not follow rule 83 of tbe rules of this court. That says: “Exceptions to tbe master’s report shall succinctly' state tbe fact of exception, tbe principle of law or conclusion of fact excepted to in tbe report, and refer to page or paragraph of tbe evidence upon which tbe exceptor-relies. Otherwise tbe exception will not be considered.” Tbe brief of tbe exceptor’s counsel makes some reference to, “tbe evidence taken upon tbe bearing of this controversy . . . among tbe files presented to this court,” ■ but this does not come up, to tbe requirements of tbe rule. [314] 2. Waiving this, tbe argument for tbe receiver is that, in point of fact, there was no breach of tbe contract as to advances, in that advances are usually spread out over tbe whole season, while tbe facts indicate that $1,900. of tbe $2,400 bad been paid before tbe receivership. Even conceding this, however, there would be a balance of $400 that was to have been paid, and which, in point of fact, was not paid. Damages are not to be measured by the amount of money withheld on such a contract, but by the loss occasioned to the colono in consequence of not having the promised amount. The master’s report finds that these damages amounted to $900, to which is added a balance due on 1913 account. There does not seem to be any satisfactory showing made that the master was in error as to these amounts, and he is therefore sustained. 3. The receiver further urges that, if there were a breach of the contract at all, it was by the petitioner himself, in that he did not cultivate 130 cuerdas as called for by the contract, but confessedly cultivated only 80 cuerdas. The contract as accepted says: “You will be obliged to cultivate in the Casiana property at least 130 cuerdas of cane, including ratoons and good new cane, each year during the term of the contract, provided that the property contains an acreage of 180 cuerdas.” There is no exception to the master’s finding in this regard, and therefore the argument cannot be entertained, and moreover it may be added that, upon the facts, it is not clear that the facts show a breach by the petitioner. . 4. The court in this case directed the receiver to investigate and elect what contracts should be continued and what not. Under this the receiver decided to abrogate the contract, which action was approved by the court. This action of the court [315] was taken for tbe interest of tbe whole trust at large. It is an unusual power and is to be exercised only with great care. Of such an act no one can complain. It does not amount to tbe infraction of tbe contract by either party, and, from tbe necessity of tbe case, is not an infraction by tbe court. No legal damages result to either party from this action of tbe court. It is damnum, ahsque injuria. It is in tbe nature of an act of sovereignty by judicial representatives of tbe state. There are therefore no damages accruing from tbe receivership as such. 5. This case comes under tbe principle of an anticipatory breach of contract. This occurs where one party puts it out of bis power to perform tbe contract. In this case the defendant central, in legal effect, put it out of its own power to carry out tbe contract when it went into tbe bands of a receiver. It is true that tbe appointment of a receiver is tbe act of tbe court, and not of tbe defendant central, but, in legal effect, when tbe central became insolvent, it made tbe performance of its contract impossible. 6. When a receiver rejects a contract, bis rejection relates back to tbe beginning of tbe receivership, and. the breach takes effect at that time. Tbe damages, if there be any, date from tbe appointment of tbe receiver; but they run against tbe, defendant central. As they are merely an open account on unsecured debt, they would not ordinarily be collectable from tbe assets of tbe receivership, and for this reason tbe claim at bar seems to be tbe first of its kind urged in this court. It comes up as an offset to an acknowledged claim of tbe receiver. Set-off was first allowed in bankruptcy by tbe act of 4th Anne, chap. 17; Byles, Bills, 431, 432; Re Globe Ins. Co. 2 Edw. Ch. 625. Where there are mutual accounts it is not just for one party to be allowed to collect bis claim in full if the other [316] cannot collect his. In the case at bar the claim for damages by the colono can be set off against the claims of the landlord central under the contract. There is no exception to the master’s finding that the claim of the central for $1,931 advances, on the 1914 crop, and $219.66 interest, is correct. The contest is on the offset, which the special master found to exceed the principal debt. 7. An exception raises the question whether the special master-was right in reducing the agreed'rent for the time of the receivership. No evidence is cited on either side, and none is. mentioned by the special master to support his finding “that the rental may properly be reduced to $10 per cuerda, on the-ground that the advances to be furnished by the central to, petitioner under the original contract were an important consideration for his agreement to pay at the rate of $12.50 per cuerda.” The petitioner claims damages, “first, for the money and labor expended in preparing for future crops to be ground at the defendant’s central, . . . and, secondly, for the-loss of profits by the petitioner.” No claim is made that the-rent should be reduced, and the matter was not directly before the special master. It is true that the setting aside of' the contract sets aside the agreement as to rent as well as to all other parts of it, and it becomes a matter of qiumlum valeat; but the agreement of the parties expressed in the contract is very-high evidence of facts recited in it, such as the rental value-of the land. The exception to the special master’s report is. therefore sustained as to this item. The exception to the master’s report as to damages is overruled, and the exception as to reduction of rental is sustained. The clerk will enter a decree for the difference, to wit, $310.23.. It is so ordered.