A. S. Knowles Dry Goods Co. v. Gunter , 204 Ala. 411 ( 1920 )

This suit is for breach of contract, the material portions of which will appear in the statement of the case. The part of the contract which constitutes the subject-matter of this litigation relates to the agreement of appellant, as part of the consideration of the lease contract, to erect upon the lot of appellee a brick building, improvements to cost not less than $8,000.

It is conceded that the defendant did in fact comply with the strict letter of the contract by erecting a brick building upon the premises costing more than $8,000; but it is insisted by the plaintiffs that the erection of the building in the defective manner, as pointed out in the complaint and as shown by the proof, was a violation of the spirit and true meaning of the contract as contemplated and understood by the parties at the time of its execution; that it was intended and understood that the building would be a brick store fronting in the customary manner on Washington street, so as to be used for ingress and egress, with a floor on a level with the sidewalk, and customary walls on each side of the building; and that, in short the structure should class with the fundamental requirements of storehouses suitable for business at that point.

Upon the other hand, the appellant relies upon those authorities (Lee v. Cochran, 157 Ala. 311, 47 So. 581; Henderson v. Murphree, 109 Ala. 556, 20 So. 45) recognizing the principle that where a contract is plain and unambiguous the court is without power to alter the agreement by judicial construction; and that, in fact, if any construction is to be had, it should be construed as authorizing the erection of this brick building with its relation to the building occupied by appellant facing on Dexter avenue. Appellant also pleaded and relies upon the doctrine of equitable estoppel as a defense to this action.

The argument of counsel for appellees in support of their insistence as to the proper construction of this contract is most plausible and the writer upon first consideration was very much impressed therewith, but, upon more mature deliberation and in consultation of this cause by the entire court, the conclusion has been reached, for reasons hereinafter stated, that the plaintiffs in the court below were not entitled to maintain this suit.

The evidence is without dispute that at the time of entering into the lease contract plaintiffs' lot contained but scant improvements. The lease contract provided for the payment of $1,000 per year as rent for a period of 10 years, and the erection of a brick building, without further description, to cost $8,000. The plaintiffs must have known, as was disclosed by the undisputed evidence, that the defendant was to use the building to be erected in connection with its store facing on Dexter avenue. The lease contract was entered into September 9, 1907, and within three months thereafter defendant began the excavation of the lot, excavating to the depth of 5 or 6 feet below the level of Washington street and completing that part of the work on February 1, 1908. The construction of the building was begun in June, 1908, and completed in October of the same year. It was a brick building costing over $11,000, two stories in height, connecting with defendant's building on Dexter avenue, and erected some 15 feet from the Washington street line.

The agreed statement of facts, which appears in the statement of the case, discloses that two of the plaintiffs all during the years 1907 and 1908 were residents of Montgomery, and while the excavation was being made and the building being constructed passed and repassed this place, saw its construction, and made no complaint or objection of any kind to the defendant or any one as to its construction until after the termination of the lease contract. It is further shown that, during the entire existence of the lease, payments of rent of $1,000 per year, payable monthly, were duly made in accordance with the terms of the contract. The other plaintiff, not referred to in the agreed statement of facts, testified that his brother C. P. Gunter called his attention to the fact that the excavation was below the surface of the street, but at that time the excavation was completed and the building partly erected.

We are of the opinion that those facts are sufficient to establish that negligent silence which may become the foundation of an equitable estoppel. The principle of estoppel by silence is well recognized, and the authorities numerous. 21 R. C. L. 692, 695; Town of Brookhaven v. Smith, 118 N.Y. 634,23 N.E. 1002, 7 L.R.A. 755, and note; Bigelow on Estoppel, 583-588. The principle is also well recognized by our own authorities, as, in Tobias v. Josiah Morris Co., 126 Ala. 535,28 So. 517, the court said:

"Negligent silence may work an estoppel as effectually as an express representation. * * * So too acts or conduct, though nothing is said, if they are calculated to mislead, and do in fact mislead, will work an estoppel, notwithstanding there was no intention to do so."

See, also, Brooks v. Greil Bros. Co., 179 Ala. 459, 60 So. 387; Id., 202 Ala. 607, 81 So. 549.

The case of Forney v. Calhoun County, 86 Ala. 463, 5 So. 750, is doubtless more nearly in point. The respondent in that bill had dedicated to the county his interest in certain lands for the erection of a courthouse; he insisting that the dedication was upon the condition that the building should be erected in the center of the block, while the county contended that the dedication was unconditional. The building was not erected in the center of the block, and after its completion suit in ejectment was brought and injunction sought by the county against the prosecution of that suit. The injunction was rested upon the doctrine of equitable estoppel, and based upon the theory that the defendant saw the building from day to day in course of construction, frequently passing and repassing, knew who had charge of the work, and made no complaint and expressed no dissatisfaction as to the location. As stated in the opinion in that case:

"Every additional brick added to the structure was an argument against the defendant's silence, and each stroke of the carpenter's hammer a voice commanding him to speak."

Under these facts the court had no hesitancy in holding that the negligence on the part of the owner in failing to make seasonable objection was such as to raise against him an equitable estoppel, for he must have known that the county was induced by his conduct to believe that he had waived his objection as to the location of the building.

Fraud is not essential in cases of this character, for such negligent silence alone, coupled with both an opportunity and a real or apparent duty to speak, suffice for the creation of the estoppel, and the other party is thereby induced by such silence to act to his prejudice.

It is no answer to this contention to say that the lease was for a period of 10 years, and that the plaintiffs were not to be consulted or to take any part in the erection of the building, for it is clear that only the erection of one building was in contemplation. They saw its location, the manner of its construction, its substantial character, that it was being erected with relation to the building occupied by defendant facing Dexter avenue, and that in fact the defendant was acting within the letter of the contract, but made no complaint or suggestion of dissatisfaction. Defendant expended more than $3,000 in excess of the sum required, and rents were collected during the entire period, payable monthly, by the plaintiffs. Under these circumstances we are persuaded that the doctrine of equitable estoppel must bar the plaintiffs of relief.

There is another principle recognized in the construction of contracts to the effect that where the parties have given it a practical construction by their conduct, such construction is entitled to great weight in determining its proper interpretation. 13 Corpus Juris, 546; Birmingham W. W. Co. v. Windham, 190 Ala. 634, 67 So. 424; Birmingham W. W. Co. v. Hernandez, 196 Ala. 438, 71 So. 443, L.R.A. 1916E, 258. "Where the question is what construction shall be placed on an agreement where its terms are not clearly defined, the acquiescence of one party in the other's known construction and compliance with his demands is illuminative." 13 Corpus Juris, 549; Mutual Reserve Fund L. Asso. v. Taylor, 99 Va. 208,37 S.E. 854.

So here it was made clear to plaintiffs that defendant construed the contract as authorizing the erection of the brick building with relation to the store then occupied by it facing on Dexter avenue, just as it was erected, and their conduct must be held to show an acquiescence on their part in this construction, and brings the case within the influence of the well-recognized rule above stated.

It therefore results the judgment was erroneous, and must be reversed, and one will be here rendered for defendant.

Reversed and rendered.

ANDERSON, C. J., and McCLELLAN, SAYRE, SOMERVILLE, THOMAS, and BROWN, JJ., concur.