Hambly v. Delaware, M. & V. R.

Bradley, Justice. This is an action of covenant, brought on an agreement under seal, made the eighth of May, 1869, between the plaintiff and the original defendant, whereby the plaintiff agreed to lay the superstructure of the defendant’s railroad from Georgetown to Delaware bay, near Lewes, about 17 miles, under the direetioh of the company’s engineer; and to.build a pier out into the bay, according. to certain specifications, and to furnish the cross-ties, iron rails, timber, and other materials therefor. The plaintiff further agreed to begin the work within 30 days from the execution of the agreement; to complete the road to the depot grounds at Lewes by the first day of August then next, if the rails and ties could be had by that time; to have the piles of the pier driven by the last day of July; and to complete the whole work by the thirty-first day of October. In compensation for the work thus contracted for, the defendant agreed to pay the plaintiff $176,000 in the internal improvement bonds of the state of Delaware, (to be furnished to the defendant as provided for by an act of the legislature passed in 1865, and the amendments thereof,) and $150,000 in certificates of full-paid stock of the company, for which the plaintiff was to subscribe on the execution of the contract. This consideration was to be paid as follows: Sixty thousand dollars as soon as that amount of materials should be furnished and labor performed, according to the estimate of the engineer, and monthly thereafter, upon like estimates, in amounts equal to the materials furnished and labor done during each month, respectively, with any balance before unsettled for; the part payments to be in bonds and stock, proportional to the respective amounts of bonds and stock to be paid for the whole work. The declaration has seven counts, in each of which the agreement is set forth in full. The first and second counts rely upon the implied agreement of the defendant to permit the plaintiff to carry on the work to its completion, and allege, by way of breach, that the defendant prevented the plaintiff from doing so, and thereby deprived him of the profits of the undertaking. The statement of this implied covenant in the first count, as finally amended and settled by consent of the parties, is to the following effect, namely: That in — 543 — and by the said articles of agreement the defendant covenanted and agreed with the plaintiff to permit him to carry on, prosecute, and perform the work agreed to be done, until the same should be fully done and completed, in manner as provided in, and according to the provisions and requirements of, said articles of agreement, and the plan, design, and specifications therein referred to, or until the thirty-first day of October, 1869, whichever should first happen. In the second count it is slightly varied, stating the implied covenant to be to permit the plaintiff to perform and complete tho work by tho thirty-first day of October, 1869, in manner as provided in, and according to the provisions and requirements of, said articles of agreement, and the plan, design, and specifications therein referred to. The assignment oí a breach in each case, after categorically alleging, in the terms of the covenant, that the defendant did not permit the plaintiff to perform and complete the work, proceeded to aver that, on the contrary, the defendant, before the work was fully done, to-wit, on the twentieth of August, 1869, did wrongfully prevent the plaintiff from carrying on and performing the said work, and from subscribing for the $150,000 stock of the company, although tho plaintiff was in good faith engaged in carrying on and performing said work, and ready, willing, and able to carry it on to completion, as provided in the agreement, and to subscribe for said stock. These counts wero demurred to, on the grounds—First, that the implied covenant to permit the plaintiff to do the work is not correctly set out; secondly, that the breaches, as get forth, do not correspond with the covenant; and, thirdly, that the counts are generally bad. I do not think that either of these grounds is well taken. I do not well see how the implied covenant could have been better stated. The agreement on the part of the plaintiff to do the work, and on the part of the defendant to pay for it, certainly raised an implied covenant on tho part of the latter to pormit the plaintiff to do the work in the manner, and according to the provisions and requirements, of the agreement. This is exactly what the plaintiff, in the first and second counts, states tho implied covenant to have been. It was certainly not necessary to repeat all those terms and requirements ovor again. These stood as they were written, unaffected by the covenant as expressed or unexpressed, and qualifying its effect in either case alike. In the two counts the implied covenant is set forth in different terms, hut amounting to substantially the same thing. The agreement was that the work should be completed by the thirty-first day of October. This means that it should be completed on that day, or before. The first count expresses it in both ways; the second simply uses the terms of the agreement—by the thirty-first of October. Both are right. It is objected that the implied covenant, as defined in the declaration, obliged the defendant to permit the plaintiff to go on with the — 544 — work without complying with certain conditions, such as subscribing for stock immediately upon the execution of the agreement, commencing within 30 days, etc. If these were conditions, either precedent or subsequent, they are fitly provided for in the - qualification annexed to the plaintiff’s definition of the covenant, namely, to permit the plaintiff to prosecute and perform the work until performed and finished in manner as provided in, and according to the provisions and requirements of, the articles of agreement, and the plan, design, and specifications therein referred to. The counsel of the defendant, however, contend that several of the “provisions and requirements” of the agreement were conditions precedent, the performance of which was necessary to entitle the plaintiff to proceed further with the work, and to claim the compensation provided for; and that he ought to have alleged performance of these conditions, or that the company prevented.him from performing them; and they enumerate the following'as such conditions precedent: (1) Subscribing for $150,000 capital stock upon the execution of the agreement; (2) beginning the work within 30 days therefrom;. (3) having the piles of the pier driven by July 31st; (4) having the road ballasted and finished to the depot grounds at Lewes by the first, of August. But I do not regard these engagements as conditions precedent, if they are. conditions at all.. They are not, in terms, made so by the parties themselves, and I cannot perceive any implied intent that they should be so. They stand simply on the agreement of the plaintiff, for the breach of which he might be liable to damages if the defendant could show anj damages resulting therefrom. If the plaintiff’s delinquency in these particulars evinced an intention on his part to abandon the contract, and not perform it at all, it would be evidence on that issue, and such abandonment would have'authorized the defendant to consider the contract as at an end, and to stop the plaintiff from further intermeddling with the road and pier. This is the .result of the most recent authority. Mersey Steel & Iron Co. v. Naylor, 9 Q. B. Div. 648. It may be added that, as to the subscription of stock, the plaintiff does allege that the company prevented him from subscribing; and the completion of parts of the work at particular times was necessarily a thing subsequent to the performance of a large part of it; but still only extended to a part, and not to the whole consideration of the contract, both being circumstances on which courts often rely in construing a covenant not to be a condition precedent. The next alleged ground of demurrer, namely, that the breaches of covenant assigned in the first and second counts do not correspond with the covenants set forth therein, is equally insufficient. The breaches assigned seem to me directly to traverse and deny the keeping of the covenants. The plaintiff not only categorically alleges that the company did not permit him to prosecute and perform the work until completed in the manner provided, but proceeds to allege — 545 — specifically, that after the making of the agreement and before the thirty-first of October, 1889, to-wit, on the twentieth of August, 1869, the defendant wrongfully prevented him from prosecuting and performing the work, and wrongfully prevented him from further prosecuting it and from subscribing the stock, although the plaintiff was engaged in good faith in carrying it on, and was ready, willing, and able to complete the same and to subscribe for the stock, according to agreement. In what tonus more direct the plaintiff could have alleged that the company prevented him from performing the contract on his part, it is somewhat difficult to see. The third count sets forth an implied covenant on the part of the defendant, at or within a reasonable time after the completion of the entire work, tq pay the plaintiff, in bonds and stock as aforesaid, any balance their unpaid; and then avers that the plaintiff, before the thirty-first of October, 1869, and before the work was completed, and before the defendant’s engineer had made any estimate, to-wit, on the twentieth of August, 1889, was, in good faith, engaged in prosecuting the work, and was ready, willing, and able to continue it to completion, and ready and willing to subscribe for the 1150,000 of stock; but that the defendant wrongfully prevented the plaintiff from prosecuting and performing the work, and from subscribing said stock, and thereby discharged him from further performance, and prevented the making of any estimate by the engineer; and the count then alleges as a breach oí the covenant that the defendant has not paid the said plaintiff the said bonds or stock, or any part thereof. This count is demurred to on precisely the same grounds as the first and second counts are. It seems to mo that the implied covenant to pay any balance that might be due after the completion of the work is well enough stated. But I think that the count is bad for other reasons. It proceeds upon the idea that the plaintiff is entitled to recover pay for work not done, on the ground that the defendant prevented him from performing his contract, and discharged him from the performance of it. Ho therefore claims the benefit of that rule of law by which one party is bound to perform bis part of a contract when the other party has tendered performance on his part; as in a contract for purchase of laud ora chattel, if the vendor tender a deed for the land, or delivery of the chattels, which is refused, he may compel the other party to pay the price agreed on; or, where any other thing is agreed to be done by one party which can be done at once, and the doing of which makes it the duty of the other party to pay a sum of money, or do some other thing, a tender'—that is, a readiness and offer to do the thing so agreed to be done, and a refusal of it by the other party—will oblige the hitter to pay or perform his part of the agreement; but when he has thus paid or performed he will be entitled to have the thing tendered. There are many cases of this sort. Sec Platt, Cov. 104; Jones v. Barkley, 2 Doug. 684; Add. Cont. §§ 880, 881; Benj. Sales, (3d Ed.) 859, and note. But — 546 — where one party agrees to perform a service or work which necessarily requires time and progress in the performance, and is to receive compensation 'from the other party therefor, if the party for whom the service or work is to be done puts an end to the performance, either before its commencement or during its progress, the other party, though able and willing to proceed, cannot recover compensation for work not done, but can. only recover damages for the breach of the contract; and those damages will consist of his outlay already incurred, and of the profits which he would have realized had he been permitted to complete the work; or, in place of outlay, when the compensation for the service is divisible, he may recover compensation for the service already performed, and damages for being prevented from completing his contract. U. S. v. Behan, 110 U. S. 338; S. C. 4 Sup. Ct. Rep. 81, The third count, therefore, is based on an incorrect view of the law. It claims compensation for work not shown to be done, instead of claiming damages for expenditures incurred and profits lost, which is the only ground of claim that could properly be made, according to the facts disclosed. The defendant is therefore entitled to judgment on the demurrer. ■ The fifth count alleges full performance of the contract on the part of the plaintiff by completing the road and pier on or before the thirty-first of August, 1870, and that the same was accepted by the defendant, without alleging any estimate or certificate of the engineer; breach; non-payment of compensation agreed on. The defendant demurs to this count for several reasons: (1) That it does not show that the work was completed within the time or times required; (2) nor that the company waived this condition; (3) nor that any estimates were made by the engineer; (4) that it does not show any breach by the company of any covenant required to be performed by it. I have already stated my opinion that the covenants as to time were not conditions precedent. This disposes of the first and second grounds of demurrer. The third ground, that no estimates are shown to have been made by the engineer, is not material. These estimates were only required for the purpose of determining the amount of work done, from time to time, to entitle the plaintiff to partial installments of payment. When the work was completed the whole compensation stipulated for became due, or any balance thereof remaining unpaid. The objection that no breach is assigned upon any covenant binding on the defendant is untenable. The breach assigned is non-payment of the bonds and stock stipulated for. This is sufficient. The defendant covenanted to pay the bonds and stock as compensation for the work; and, no time being fixed for payment, (except when partial installments should be required,) the implication is that payment was to be made on the completion of the work. This is the effect of the general covenant to pay. The breach of this covenant is sufficiently well assigned; and judgment must be for the plaintiff on the demurrer to the fifth count. — 547 — The sixth count being similar to the fifth, except that it alleges that estimates were duly made ■ by the engineer, the like judgment must he given on the demurrer to that also. To the fourth and seventh counts, respectively, the defendant interposed 21 pleas. Those to the fourth only need he considered. This count is similar to the third, except that it omits to set out the implied covenant which is set out in that count. Demurrers were put in to the second, third, sixth, seventh, eighth, tenth, eleventh, twelfth, thirteenth, fourteenth, and fifteenth pleas. Issue was joined, or tendered and accepted, on the others. The second plea traverses the allegation of the count that the plaintiff, at the time of the alleged prevention, “was in good faith engaged in carrying on, prosecuting, and performing said work.” This plea puts in issue the plaintiff’s “good faith.” It may be taken as admitting that the plaintiff was, in fact, “engaged in carrying on, prosecuiing, and performing said work,” but as denying that ho was doing so “in good faith.” Now, if the work was being properly done, of what possible consequence was it to the defendant whether it was being done in good faith or in bad faith. No attempt is made to show in what respect the plaintiff was acting in bad faith, or whether it in any way affected the due performance of the contract. I am clearly of opinion that the plea raises, or attempts to raise, an immaterial issue, and that judgment must be for the plaintiff on the demurrer. The third plea avers that, at the time of the alleged prevention, the plaintiff ivas not (as in the fourth count it is stated that ho was) ready, willing, and able to further carry on, prosecute, and perforin the work until it should he completed. The averment of the fourth count thus traversed is a material one. If the plaintiff was not ready, willing, and able to further carry on the work, the defendant had a right to rescind the contract and stop the plaintiff from going-on. Failure on Ills part to keep some of his engagements would not give the defendant such right; hut inability or unwillingness to prosecute the work to completion would; — understanding by the term “unwillingness” an intent not to perform, but to abandon the contract, which is its legal effect in this connection. If, under this plea, the defendant should prove that the plaintiff, at the time he was prevented from going forward, did not intend to perform the contract, but meant to abandon its performance, or that he was absolutely unable to perform it from some inability which could not be overcome, (and nothing short of such proof would he sufficient,) it would he a good justification of the prevention charged; for it would be a good ground for rescinding the contract, which the prevention of the plaintiff from going on virtually amounts to. Giving this effect to the plea, (which is its legitimate effect,) it is a good plea to the fourth count, and judgment should be given for the defendant on the demurrer thereto. The sixth plea alleges that the defendant did not wrongfully dis — 548 — charge the plaintiff from further carrying on the work.. This is demurred to. It does not, in terms, traverse any averment of the count. The latter alleged that the defendant wrongfully prevented the plaintiff from further carrying on the work, and did thereby wholly discharge him from further carrying it on, and thereby prevent the making of any estimate by the engineer. The plea takes issue, not on the prevention of the work, (which is the thing charged,) but only on the alleged consequence of that prevention, namely, the- discharge from further performance; and not even on that, but it denies that the defendant wrongfully discharged the plaintiff. The plea has two faults: First, in taking issue on an alleged result or consequence; and, secondly, in making the rightfulness or wrongfulness of that result a part of the issue. It is manifestly open to the objection of taking an issue upon matter of law. Judgment must be for the plaintiff on this demurrer. The seventh and eighth pleas are amenable to precisely the same objection as is the sixth plea, and judgment must be for the plaintiff on the demurrers to those pleas. The tenth plea alleges that the plaintiff neglected, upon the execution of the contract, “to subscribe for $150,000 of the capital stock of the company.” The count alleges that the defendant wrongfully prevented the plaintiff from subscribing said stock. The plea, in answer to the charge of wrongfully preventing the plaintiff from further prosecuting the work after he had commenced to prosecute it, and from subscribing the stock, sets up the defense that he neglected to subscribe for the stock upon the execution of the contract, thus making the time of subscription a material part of the issue. I have already stated my opinion that the time was not a condition precedent; consequently, .it was not material. To show that it was material, however, counsel for the defendant refers to the statute, by which the defendant was to have use of the state bonds, with which it had agreed to pay the plaintiff in part for his work. That statute required the stock of the defendant to be subscribed and paid in before the bonds would be issued. A supplement, passed a day or two prior to. the execution of the agreement in this case, authorized the payment of the stock to be in material, work, and labor. It is evident, therefore, that the condition of obtaining the bonds (if the stock was not paid for in money) could not be performed until the material, work, and labor were supplied and furnished. Therefore the failure to make the subscription before the material, work, and labor were supplied (if made then) could make no difference to the defendant. There appears to be nothing in the statute, therefore, to make the exact time of subscription material. Judgment must be for the plaintiff on the tenth plea. The eleventh plea is that the plaintiff did not begin the work in 30 days from the time of the execution of the agreement. From what has already been said, this is an immaterial matter. The time — 549 — of commencement was not a condition precedent. Judgment must be for the plaintiff on the demurrer to the eleventh plea. The fourteenth and fifteenth pleas are bad for the same reason, alleging only that the piles of the pier were not driven, and that the road was not completed to the station ground at Lewes in the respective times agreed on. The twelfth plea alleges that the plaintiff did not, with reasonable diligence and within a reasonable time after the making of the agreement, in good faith, begin tlie work. Here, again, the “good faith” of the plaintiff is put in issue; and, for the reasons stated in considering the demurrer to tho second plea, the demurrer to the twelfth plea must be sustained, and judgment given thereon for the plaintiff. The thirteenth plea alleges that the plaintiff did not, after he began the work, thenceforth exercise reasonable diligence in carrying on, prosecuting, and performing it. Lid the fact set up in this idea justify the defendant in putting an end to the contract by preventing the plaintiff from going on tinder it ? That is the question. It may be that the plaintiff was under an implied contract to exercise reasonable diligence, and, not doing so, was liable in damages. It may even be that his failure to exercise reasonable diligence was evidence from which a jury might infer an intention on his part to abandon and be no longer bound by the contract, which intention would justify tho defendant in rescinding it. But was it of itself a fact sufficient to justify such a course? According to the law as laid down in tho latest English authorities if was not. Lord Gouebidge, in delivering the judgment in Freeth v. Burr, L. R. 9 C. P. 208, Benj. Sales, (3d. Ed.) § 904, says: “In cases of this sort, where the question is whether the one party is set free by the action of the other, the real matter for consideration is whether the acts or conduct of the one do or do not amount to an intimation of anintention to abandon and altogether refuse performance of the con tract. * * * I think it may bo taken that tiio fair result of the decisions is that the true question is whether the acts and conduct of tho party evince an intention no longer to be bound by the contract. .Now, non-payment on the one hand, or non-delivery on the other, may amount to such an act, or may be evidence for a jury of an intention wholly to abandon the contract and set tlie other party free. ” This rule was approved in tho recent case of Mersey Steel & Iron Co. v. Naylor, 9 Q. B. Div. 648, in the court of appeal, where Sir Geobge Jessel, and Lords Justices Lindley and Bowen, stated the true test to be that suggested by Lord Colebidge, viz., whether tho acts and conduct of the one party evince an intention to abandon and be no longer bound by the contract, and that this is a question of evidence. See Benj. Sales, (3d Ed.) § 903. Now, it cannot be said tnat failure to exercise reasonable diligence in prosecuting the work is, in law, proof of abandonment of the contract, though it may be evidence for a jury. The defendant pleads it as sufficient proof, in law. The proper plea would have — 550 — been that the plaintiff had abandoned the contract, and the want of reasonable diligence would have been evidence for the jury under that plea. In my judgment the plea is bad, and the demurrer must be sustained. This disposes of all the issues of law, and judgment will be entered accordingly.