Howard & Rice v. Thompson Lumber Co.

JUDGE BURNAM delivered the opinion of the court. On tbe tth day of December, 1895, appellants agreed with appellee that, in consideration of $3.25 per thousand feet, they would haul and deliver at its mill yard all of the poplar saw logs to be cut on a tract of land owned by appellee. The work was to begin on or before December 20th, and appellants were to deliver as much as 150,000 feet by the 1st day of March, 1895, and in each succeeding month thereafter as much as 120,000 feet, until all the logs were hauled and delivered; the entire job to be finished not later than the 15th day of August, 1896. Appellants were, at their own expense, to build their own tramways; appellee to furnish the lumber. Appellee was to have the logs ready, so as not to delay appellants at any time in the performance of the contract. Appellants agreed to begin the construction of the tramway up Rich Branch as soon as they began work, and to complete it as soon as it could — 568 — be done. The contract further provided that all logs delivered under the contract were to be paid for at >the end of each month, excepting 10 per cent., which was to be retained by appellee until the contract was performed. It was stipulated that for all the logs delivered before the tramway up Rich Branch was completed only $2.50 per thousand feet was to be paid, after which time the remaining 75 cents on the thousand feet was to be paid; and that, if appellants abandoned the contract before the tramway was completed, no further payments should be made on the logs delivered, and the tramway should become the property of appellee, and that the 10 per cent, reserve from monthly payments should not be demandable. The contract further provided that, in the event appellants should fail to haul and deliver the quantity of logs specified by the 1st of March, or refused or failed to begin or complete the tramway, the contract should be deemed forfeited, and appellee should have the right to take possession of the tramway and shanties, and put other persons to work to haul and deliver the logs, and that the 10 per,cent, reserve and 75 cents per thousand feet on logs delivered should be forfeited to appellee. This suit was instituted by appellants to recover the 10 per cent, retained by appellee on monthly estimates, and 75 cents per thousand feet retained on the whole quantity of logs delivered, for failure to complete the tramway, and for various other items of damage set out in the petition. Appellee, by way of defense, relies upon the failure of appellants to perform the conditions of their contract as to the completion of the tramway and the delivery of the logs thereunder, and pleaded damages to their logs by failure of appellants to deliver the logs promptly, etc. Appellants, in their reply, deny the alleged damages, — 569 — and plead a waiver of the right to forfeiture of the money retained by appellee by the acceptance of the logs delivered to it. Upon the trial the court gave a peremptory instruction to find for defendant, and we are asked upon this appeal to reverse the judgment entered pursuant to the verdict rendered thereunder. The testimony shows that appellants began work under this contract, and that they did not deliver exceeding 100,-000 feet of the logs by the 1st day of March, 1896, or more than 60,000 feet per month thereafter, but that appellee, notwithstanding such failure, continued to receive and pay for the logs delivered, and urged appellants to go on with their contract, until July, 1896, when appellee declared the contract forfeited, and took possession of the tramways, and refused to recognize appellants further, retaining the 10 per cent, and the 75 cents per thousand feet on logs delivered; that appellee had no logs cut for hauling on the 20th day of December, 1895, and in fact did not begin to cut them until about the 15th day of January thereafter; that they did not make any monthly measurements, as contemplated by the contract, but advanced money thereon for about their value, retaining the 10 per cent, and the 75 cents per thousand feet for failure to complete the tramway; that only two measurements were actually made during the time — one in May, and the other in July. Appellants delivered about 330,000 feet of logs under the contract, and built about a mile of the tramway. Appellee accepted these logs, advanced money upon them, and continued to urge appellants to deliver more logs until some time in July, 1896. The main question to be determined on this appeal is, did appellee, by the acceptance of the logs which were — 570 — actually delivered, and its request to appellants at the time to continue the work, waive its right in July to declare a forfeiture of the contract, and retain the 10 per cent, on monthly estimates and the 75 cents per thousand feet as its property? Mr. Lawson, in his work on Contracts (section 455) says: “The performance of a condition may be waived by the party who has a right to enforce it, in which case the latter will • be precluded from relying ■ upon the performance of -the residue as a condition precedent to his liability, but must perform the contract on his part, and rely upon his claim for damages in respect to the defective performance. Thus, where one of the parties to a contract is bound to do certain work within a certain time, and fails to complete it within the stipulated time, and the other party urges him to go on, this is a waiver of strict performance as to time, and a recovery may be' had on the basis of the amount and value of the work done, reckoned at the contract price, deducting damages for the delay.” And in discussing this question in the case of Colby Construction Company v. Seymour, et al, 91 U. S., 650, Justice Miller says; “Where a specified thing is to be done by one party as the consideration of the thing to be done by the other, it is undeniably the general rule that the covenants are mutual, and are dependent, if they are to be performed at the same time; and if, by the terms or nature of the contract, one is first to be performed as the condition of the obligation of the other, that which is first to be performed must be done or tendered before that party can sustain in a suit against the other. There is no doubt that in This class of contracts, if a day is fixed for performance, — 571 — the party whose duty it is to perform or tender performance first must do it on that day, or show his readiness and willingness to do it, or he can not recover in an action at lav/ for non-performance by the other party.” But, both at common law and in chancery, there are exceptions to this rule, growing out of the nature of the thing to be done and the conduct of the parties. The familiar case of part performance, possession, etc., in chancery, where time is not of the essence of the contract, or has been waived by the acquiescence of the party, is an example of the latter. . . . If the builder has done a large and valuable part of the work, but yet has failed to complete the whole or any specific part of the building or structure within the time limited by his own covenant, the other party, when that time arrives, has the option of abandoning the contract for such failure, or of permitting the party in default to go on. If he abandons the contract, and notifies the other party, the failing contractor can not recover on the covenant, because he can not make or prove the necessary allegation of performance on his own part. What remedy he may have in assumpsit for work and labor done, materials furnished, etc., we need not inquire here; but, if the other party says to him, ‘I prefer you should finish your work,’ or should impliedly say so by standing by and permitting it <to be done, then he so far waives absolute performance as to consent to be liable on his own covenant for the contract price when completed.” And this principle of law was adhered to in the case of Henderson Bridge Company v. O’Connor & McCullough, 88 Ky., 303, [11 S. W., 18, 957]. Appellee, in accepting the logs actually delivered, and paying therefor, and in urging and encouraging appellants to go ahead with the work, waived' its right to claim the — 572 — forfeiture of the 10 per cent, on monthly settlements and ■the 75 cents per thousand feet for failure to complete the tramway, and appellants are entitled to maintain this action to recover the amount due them under the contract for logs actually delivered; but appellee is entitled to recoup by way of set-off or counterclaim damages sustained on account of the'' failure of appellants to keep their contract, unless such failure was occasioned by the faulf of appellee. These are proper questions for the jury. For reasons indicated, we think the court erred In giving a peremptory instruction in this case, and it is therefore reversed, and the cause remanded for proceedings consistent with this opinion.