Eastern Advertising Co. Ex Rel. Southern Street Railway Advertising Co. v. George K. McGaw & Co. ( 1899 )

George K. McGaw and Company entered into a contract with the Eastern Advertising Company on March the nineteenth, eighteen hundred and ninety-seven. By the terms of that contract the Eastern Company agreed to carry in two hundred and fifty cars of the various street railways in Baltimore the advertising cards of McGaw and Company for twelve months, beginning with April the first, at one hundred and fifty dollars per month. There are various provisions contained in the contract, many of which it will not be necessary to notice. The advertising cards were to be "subject to approval of the Eastern Advertising Company as to style and contents;" and it was stipulated that ``if the Eastern Advertising Company shall cease to have the right to maintain the advertisement herein specified, this contract shall terminate, and the other party hereto shall pay under it only to the time of such cessation." On the ninth of September, eighteen hundred and ninety-seven, McGaw and Company were notified by the Eastern Company that it had "sold all its street car advertising interest in Baltimore to the Southern Street Railway Advertising Company." This notice further stated that "all payments for advertising from September the first, eighteen hundred and ninety-seven, should be made to the Southern Street Railway Advertising Company," and that "all amounts due for advertising prior to September the first, eighteen hundred and ninety-seven belong to and are payable to" the Eastern Advertising Company. The notification concluded with these words: "Thanking you for your past patronage and soliciting a continuance of the same for our successors, we are," c. Immediately upon the receipt of this notice the appellees informed the president of the Eastern Company that they would not accept or assent to the assignment of their contract. The appellees had paid to the Eastern Company every monthly instalment up to September the first, but they refused to pay to the Southern Street Railway Advertising Company the sum claimed by it for the month of September. Thereupon suit was brought in the name of the Eastern Company to the use of the Southern Street Railway Advertising Company against the appellees for one hundred and fifty dollars, the amount claimed to be due for the month of September.

The declaration set out in the first count the substance of the contract and the alleged breach; whilst the second count is the ordinary common count for work done and materials furnished. To this declaration the defendants, McGaw and Company, pleaded the general issue and other pleas not necessary to be noticed, and then a sixth or special plea. To the sixth plea four replications were filed and to these the defendants demurred. The demurrer was sustained and the plaintiff then filed an amended replication, upon which issue was finally joined. The case then proceeded to trial, during the progress of which a single exception to the Court's rulings on the prayers for instructions was reserved. The trial resulted in a verdict and judgment for the defendants and from that judgment the pending appeal was taken. The errors assigned are the ruling on the demurrer and the rulings on the prayers.

It is claimed that as the demurrer filed by the appellees to the four replications to the sixth plea mounted up to the first error in the pleading, the Court should have looked back of the replications and should have stricken down the sixth plea. And it is insisted that the sixth plea should have been ruled bad because it is merely an argumentative denial, and a denial amounting only to the general issue. It is undoubtedly true that if the plea is in effect simply an argumentative denial of the averments of the declaration and is substantially nothing more than the general issue it is defective and ought to have been so declared upon the demurrer to the replications. But there is a great distinction between a plea which amounts to the general issue and a plea which discloses matter that may be given in evidence under the general issue. The general issue is a denial of the whole substance of the declaration, and puts upon the plaintiff the necessity of establishing all the essential allegations of the narr. A plea, however, which gives color, express or implied, to the plaintiff's statement — admits that statement to be true — but makes defence by setting up new matter in avoidance, can never be said to amount to the general issue, for the obvious reason that the element of denial is absent. Consequently, "where the defendant elects to plead specially defences in confession and avoidance which would be admissible in evidence under the general issue, the fact that they are admissible under the general issue does not make his special plea bad." Poe Pl. sec. 641 (3rd Ed.) Now, the sixth plea admits the making of the contract sued on — sets it out in words and figures at large — thus giving express color to the plaintiff's statement; but it then proceeds to aver by way of avoidance that the Eastern Company had sold all its street car advertising interests in Baltimore, including that covered by the contract sued on; that the defendants had entered into the contract on the faith of the reputation acquired by the Eastern Company for tact and skill, judgment and experience, in the preparation and designing of such advertisements; that the defendants had not consented to the sale of this contract to the Southern Street Railway Advertising Company; and that the contract between the Eastern Company and the defendants was cancelled and annulled. These were matters in avoidance of liability on the contract, and could, even if admissible in evidence under the general issue, be specially pleaded when coupled with the admission that the contract sued on had been executed by the defendants. The plea was therefore good and was not open to attack by the demurrer. The four replications were faulty. No one of them was an answer to the whole plea. When ruled bad they were combined in one replication and upon it issue was joined.

The two instructions given at the instance of the appellees present distinct theories — the one, that the Eastern Company ceased to have the right to maintain the cards in the cars by reason of the sale to the Southern Street Railway Advertising Company and, therefore, under the terms of the contract no recovery could be had — the other, that the contract sued on is personal to the parties thereto, the delectus personae element forming an ingredient of it, and as the defendants did not assent to its sale or transfer, a recovery cannot be had upon it for the use of one who was not a party to it. The rejected prayers presented by the plaintiff are founded on directly opposite propositions. We may, therefore, discuss the principles which underlie these conflicting contentions without particular reference to the respective prayers and instructions.

With regard to the first instruction but little need be said. Under the explicit terms of the contract if the Eastern Company ceased to have the right to maintain the advertisement of the appellees in the street cars the agreement was terminated and the liability of the appellees to pay was at an end. There was evidence, to which allusion has already been made, tending to show that a sale of all the advertising interests owned by the Eastern Company had been made to the Southern Street Railway Advertising Company; and there was also evidence to the effect that the latter company after this sale claimed to control all advertising in the street car lines in the cities of Baltimore and Washington from September the first, eighteen hundred and ninety-seven. If this evidence be believed, then obviously the Eastern Company ceased to have the right to maintain this advertisement in the street cars of Baltimore, and upon that event happening the liability of the appellees was at an end. It cannot be successfully contended that if the Eastern Company really sold all its interests in the street car advertising business to the Southern Street Railway Advertising Company, the former did not lose the right to maintain the appellees' advertisement in the cars. Unless the appellees assented to this sale and thus made a new contract with the last named company, or unless the contract was one that could lawfully be assigned, when assigned or sold it would not be binding on McGaw and Company. There is no pretence that the appellees assented to the sale. On the contrary the uncontradicted evidence is that they emphatically refused their assent. This brings us to the consideration of the question whether upon a sale of the contract to the new company, the vendee was, despite the protest of the appellees, clothed with authority to perform the undertakings of the Eastern Company, and consequently acquired the right to recover compensation from McGaw and Company.

The legal principle which underlies this question has been thoroughly and fully discussed and decided by this Court in the recent case of Hand v. Evans Marble Co., 88 Md. 226. We there said: "In reference to the first question presented, the general rule has long been established, that ``one who is not a party to a contract cannot be included in the rights and liabilities which the contract creates, so as to enable him to sue or to be sued upon it.' ``A man cannot incur liabilities, and again a man cannot acquire rights from a contract to which he is not a party.'Anson Cont. 197. Or, as stated elsewhere: ``The rule embodies the principle, in whatever words expressed, that rights founded on contracts belong to the person who has stipulated for them and no other.' Dicey Parties, 78. No one can assign his liabilities under a contract without the consent of the party to whom he is liable; and, even where his consent is given, Anson observes (page 205) that ``this is, in effect, the rescission by agreement of one contract and the substitution of a new one, in which the same acts are to be performed by different parties,' and the same is expressed also in Dicey Parties, 223, 234. These fundamental principles have been abundantly illustrated in familliar decisions. An illustration of the inability of one to sue on a contract to which he is not a party is found in Schmaling v.Thomlinson, 6 Taunt. 147, where B. was employed by the defendants, X. Co., to carry certain goods for them. He delegated the employment to A., the plaintiff, who carried the goods without any communication with X. Co. It was held that A. could not sue X. Co. for the work done by him, ``since there was no privity between the plaintiff and the defendants. The defendants looked to B. only for the performance of the work, and he had a right to look to them for payment and no one else had.'" In Robson and Sharpe v. Drummond, 2 Barn. Ad. 303, the following facts appeared: Sharpe, a coachmaker, entered into an agreement to furnish Drummond with a carriage, for the term of five years, at seventy-five guineas a year. At the time of making the contract Robson was a partner with Sharpe, but this was unknown to Drummond, the business being carried on in the name of Sharpe only. Before the expiration of the first three years the partnership between Sharpe and Robson was dissolved, Sharpe having assigned all his interest in the business and in the contract in question to Robson and the business was afterwards carried on by Robson alone. Drummond was informed by Robson that the partnership was dissolved, and that he, Robson, had become the purchaser of the carriage then in Drummond's service. The latter answered that he would not continue the contract with Robson, and that he would return the carriage to him at the end of the then current year, and he did so return it. An action having been brought in the names of Sharpe and Robson against Drummond for the two payments which, according to the term of the contract, would become due during the last two years of its continuance, it was held that the action was not maintainable, the contract being personal, and Sharpe having transferred his interest to Robson, and having become incapable of performing his part of the agreement. LORD CHIEF JUSTICE TENTERDEN in the course of his judgment said: "After the partnership between Robson and Sharpe had ceased to exist, and after Sharpe had ceased to carry on the business of a coachmaker, the defendant offered to continue the job with Sharpe, but he replied that that was impossible. Now the defendant may have been induced to enter into this contract by reason of the personal confidence which he reposed in Sharpe, and therefore have agreed to pay money in advance. The latter, therefore, having said it was impossible for him to perform the contract, the defendant had a right to object to its being performed by any other person, and to say that he contracted with Sharpe alone, and not with any other person." And PARKE, JUSTICE, observed: "The contract was to continue for five years. At the end of the third year there was a dissolution of partnership between Sharpe and Robson, and notice of that dissolution, and of Sharpe having assigned all his interest in the contract to Robson, was given to the defendant, who said he would not continue the contract with Robson. The very fact of Sharpe's having transferred his interest in the contract to Robson (a mere stranger as far as the defendant was concerned) was equivalent to saying (that which he did afterwards say) I will not perform my part of the contract; and that is an answer to the present action brought in the names of Sharpe and Robson; for the defendant had the right to have the benefit of the judgment and taste of Sharpe to the end of the contract, and which in effect he has declined to supply." The doctrine is concisely stated in 2 Am. Eng. Ency. Law, 1036, (2d ed.) in this way: "Contracts in which the delectuspersona is material, as where a person agrees to use his personal skill and knowledge, and has been contracted with by reason of the trust and confidence placed in him personally, cannot be assigned by such person while the agreement remains executory, without the consent of the other contracting party." A large number of cases supporting the text will be found in note1.

It is perfectly obvious that skill and judgment as well as taste were required by the contract to be exercised by the Eastern Company both in the designing of the cards and in selecting the type in which they were to be printed, and in the arrangement of the cards in the cars. Its approval of the style and contents of the cards was necessary before any card could be placed in the cars. The contract was one where the delectuspersona was most material. It made no provision for an assignment; and a transfer of it for performance by another was clearly not contemplated by either of the parties to it. Its sale to the new company gave to that company no authority to execute it without the consent of McGaw; and that consent was refused. The Eastern Company disabled itself to perform the contract, and a suit in its name to the use of the assignee or vendee gave the latter no right to recover for services it had not been engaged to render. There was consequently no error committed in granting the instruction which embodied that proposition. The plaintiff's first, second and fourth prayers proceeded upon the hypothesis that the Eastern Company after the sale to the new company did not cease to have the right to maintain advertisements in the cars in Baltimore. There was not only no evidence to support that hypothesis, but the evidence in the case distinctly refuted it. The fifth prayer asked a ruling that the contract sued on was "not personal to the parties thereto." What has already been said shows the propriety of rejecting this prayer.

As we find no error in the rulings complained of the judgment appealed against will be affirmed.

Judgment affirmed, with costs above and below.

(Decided March 14th, 1899).