Cox v. McLaughlin , 1883 Cal. LEXIS 408 ( 1883 )

CONTRACT — PLEADINGS — EVIDENCE — FINDINGS — VABIANCE — LAW OF THE CASE. — The action was brought on an alleged contract in writing by which the plaintiff and his associates agreed to do certain work for the defendant in the construction of a railroad, and to furnish the materials therefor. The complaint purported to state the contract according to its substance and effect, but the answer denied the contract thus stated, and averred that the contract between the parties was embodied in two instruments therein set forth, one being supplemental to and explanatory of the other. The facts on the subject were proved and found in accordance with the answer. By the terms of the contract payments were to be made from time to time as the work progressed, but these payments were to be based on estimates made by the engineer of the road and reported to the parties. There was no allegation in the complaint. nor any proof in relation to such estimates. After stating, however, that the work had not been completed, the complaint alleged that the completion was prevented by the defendant. In support of this allegation, evidence was given on the part of the plaintiff to the effect that the payments were not made as provided for by the contract, that the failure in the payments rendered it impossible for the plaintiff and his associates to complete the work for want of means necessary to enable them to do so, and that their pecuniary condition and reliance upon the payments were known to the defendant when the contract was made. The facts were found in accordance with this evidence, and it was also found that the work had not been voluntarily abandoned by the contractors, but was wholly and entirely suspended by the defendant The contract provided in substance that the defendant should have the right, subject to certain conditions as to notice, to cause an increase or diminution of the force of laborers or other means necessary to carry on the work, or to suspend the work entirely, provision being made for delays arising from the exercise of this right, and in regard to the terms of payment in case the work should be entirely suspended. It was proved that the defendant had at different times required the force of laborers employed upon the work to be reduced, and had directed portions of the work to be suspended. On former appeals in the case, the court had decided that the action could not be maintained unless the completion of the work was prevented by the defendant, and that neither a failure in the payments nor the exercise of a right secured to the defendant by the contract was sufficient to constitute prevention.Held, 1. That these propositions had become the law of the case. 2. That no effect could be given to the evidence In regard to the pecuniary condition of the plaintiff and his associates, and that in view of the terms of the contract, this evidence was inadmissible. 3. That the finding as to the entire suspension of the work by the defendant was not sustained by the evidence, and further, that it was Inconsistent with another finding on the subject, and in conflict with the complaint. 4. That It was necessary to allege and prove the making of the estimates provided for, or to show some legal cause why they were not made. 5. That the contract set up In the answer and found by the court was different In substance and effect from the contract stated in the complaint, and that the variance was fatal. Briefs in reply were filed by S. M. Wilson, Tully R. Wise, Fox Kellogg, and Rhodes Barstow. For many reasons the judgment of the court below is erroneous. The action is one at law, on a special contract, the plaintiff alleging part performance of the contract on his part, and that of his predecessors in interest, and the preventing of the completion of it by the defendant. The case has been here repeatedly, the complaint on which the last trial was had being the seventh complaint filed in the action. Naturally enough, therefore, certain propositions have become the law of the case. Among them that averment and proof of prevention is essential to a recovery by plaintiff, inasmuch as there is no pretense of the work contracted for having been completed or the contract rescinded. (44 Cal. 18; 47 Cal. 87; 54 Cal. 605; 52 Cal. 590.) It has also become the law of the case that neither the mere failure of the defendant to pay the instalments as they became due, nor the exercise by defendant of a right secured to him by the contract itself, constituted prevention. (52 and 54 Cal. supra.)

For the purpose of evercoming the first of these last-mentioned obstacles, the plaintiff was permitted on the last trial in the court below, against the defendant's objections, to introduce testimony to the effect that both parties knew at the time of making the contract that the contractors relied, and were compelled by their pecuniary resources to rely, upon the payment by the defendant of the instalments as they became due; and the court below so found. In rightly holding such testimony erroneously admitted, MR. JUSTICE MYRICK, speaking for the court, when the case was last under consideration, said: "Parol evidence of surrounding circumstances may be given to aid in the proper interpretation of an instrument; but where the parties have themselves used words which require no interpretation, where the words are understood, there is no occasion for aid to their proper interpretation or meaning. In this case the parties had, by their contract, clearly expressed two ideas or agreements: First, that the contractors were to perform certain work; second, that the defendant was to make payments therefor in instalments. The words as to these agreements are of very plain signification. This court had decided non-payment of instalments was not prevention; therefore, by the terms of the contract payment was not a condition precedent. In order to make payment a condition precedent a clause would have to be inserted, injected into the contract, which the parties themselves did not see fit to place there. It is not in evidence that the parties agreed by parol that the payments should be conditions precedent; but even if they had so agreed, the well-known rule, would apply, that their final conclusions were as they have expressed them in writing." (10 Pac. C. L. J. 263.)

Of course this testimony was introduced, and the finding made thereon — the ninth — was made as bearing upon the question of prevention. Neither could have any other bearing. From the findings themselves it is sufficiently obvious that the prevention found by the court below was based upon the facts detailed in the ninth and tenth findings; and this becomes perfectly plain when the evidence is considered, from which it appears that the only attempt made to show prevention was to show the non-payment of the instalments by the defendant, the surrounding circumstances "just alluded to, and suspension of the work by the defendant. In the tenth finding the court found that the defendant entirely suspended the work immediately after October 2, 1865. But this finding, as was justly said by MR. JUSTICE MYRICK in the opinion already referred to, "is not sustained by the evidence. The evidence is that McLaughlin directed the diminution of the laboring force to but a few men. This he had a right to do according to the express terms of the contract. (54 Cal. 605.)" It may be added that by the express terms of the contract between the parties, the defendant was authorized to entirely suspend the work, the contract prescribing the consequences of such suspension. Prevention implies ex vitermini, a breach of contract, and, of course, a party cannot commit a breach of contract by exercising a right secured to him by the contract. The finding that the defendant entirely suspended the work is, therefore, insufficient to constitute prevention. (54 Cal. 607.) Besides, the finding is, as already shown, unsupported by the evidence, and is in conflict with another (the fourth) finding made by the court, in which it is found that the plaintiff furnished material and performed labor and service of great value in and about the execution of the contract up to September 15, 1866. It is also in conflict with the averment of the complaint itself, in which it is expressly charged that Cox and Arnold, as the successors in interest of Cox, Meyers Co., diligently prosecuted the work until September 15, 1866.

Moreover, there is in this case neither averment nor proof that the estimates of the engineer, on which alone, according to the terms of the contract between the parties as proved and found, the defendant was to pay, were made, nor is there any legal cause shown, or attempted to be shown, why such estimates were not made. This question has recently been before us in two cases, one of which is Loup v. C. S. R. R. Co. 63 Cal. 97, and the otherHolmes v. Richet, 56 Cal. 307, in which the conclusion was reached, to which we adhere, that in such cases averment and proof of the making of such estimates is essential to put the party making the agreement in default, unless legal cause is averred and proved why they were not made.

But further and beyond all this, the contract declared on by the plaintiff is essentially different from the contract set up by the defendant and proved and found by the court to have been made between the parties; and the respective rights and obligations of the parties under the one are essentially different from what they are under the other.

By the contract stated in the complaint, the obligation of Cox, Meyers Co. was limited "to the extent of doing, and furnishing materials for, all the gradation, masonry, and bridging, and all other things necessary and proper to place said roadbed (of the railroad referred to) ready for the cross-ties and iron equipment, and no more." By the contract proved and found their obligation went far beyond this. By that, the work to be done by them was to include all bridges, viaducts, embankments, excavations, road-crossings, culverts, drains, and all other things necessary, usual, and proper to place the part of the railroad described complete for the cross-ties and iron equipment to be placed thereon, andaccording to certain plans and specifications annexed to the contract and made part of it. The work to be done by them was to be done in the best and most thorough manner, and all that portion of the railroad undertaken to be built by them was to be equal to the best constructed railroad in the State, and was to be in full compliance with thecontract then existing between McLaughlin and The Western PacificRailroad Company, and in full compliance with the requirements of theboard of directors of that company. It is manifest that performance of the obligations imposed on Cox, Meyers Co. by the contract alleged in the complaint would by no means be a compliance with the obligations imposed on them by the contract proved and found.

Furthermore, the defendant's obligations, as well as his rights, are essentially different under the two. The contract proved and found is not alleged in the complaint to have been made, is not alleged to have been performed in whole or in part by the plaintiff, nor to have been broken by the defendant. The alleged contract, for the breach of which the action was brought, was not proved.

Judgment and order reversed and cause remanded for a new trial

MORRISON, C. J., MYRICK, J., McKINSTRY, J., and THORNTON, J., concurred.

Petition for a rehearing denied.