Antonelle v. Kennedy & Shaw Lumber Co.

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] In January, 1891, plaintiff was the owner of two certificates of deposit aggregating thirty-four thousand dollars, issued by the People's Home Savings Bank in favor of, and held by, one B.O. Carr. The Kennedy Shaw Lumber Company, defendant, having brought suit against the firm of Antonelle Doe, intervener, caused an attachment to issue and levied it upon certain real property of plaintiff, and garnisheed said certificates and the funds represented thereby in the hands of said Carr, on the claim that said land and money were the property of said J.S. Antonelle, husband of said plaintiff, and one of the interveners herein. The plaintiff, for the purpose of releasing her property from the attachment, entered into an agreement — executing it as Mrs. J.S. Antonelle — with said Kennedy Shaw Lumber Company, the essential parts of which for the purpose of this decision, and after the preliminary recitals therein, are: "Therefore, it is hereby covenanted and agreed, that the said Mrs. J.S. Antonelle will, and she does hereby, relinquish and release to the said Kennedy Shaw Lumber Company, all her right, title, interest and claim in, and to, the sum of $15,000 of said money, and direct the said Carr to pay the same over to the said Kennedy Shaw Lumber Company, to be applied by the said company upon its claim against the firm of Antonelle Doe, for the collection of which claim the said action has been brought. In consideration of the said relinquishment of the payment of said sum of $15,000 and the keeping of the covenants herein contained by the said Mrs. J.S. Antonelle, the said Kennedy Shaw Lumber Company does hereby covenant and agree, to credit the said sum of $15,000, when so paid upon said claim. . . . And furthermore, the said Kennedy Shaw Lumber Company does hereby promise, and agree to continue the prosecution of its suit for the collection of certain funds due from the board of state harbor commissioners and from the board of city hall commissioners, and when said funds have been collected, to apply from the proceeds thereof, enough money to discharge, in full, the amount ascertained to be due and unpaid from the said Antonelle Doe to the said Kennedy Shaw Lumber Company, either by final judgment in, or compromise of, the aforesaid suit entitled Kennedy Shaw Lumber Co. v. J.S. Antonelle et al., together with all accrued interest and costs . . . . and thereafter, to pay over to the said Mrs. J.S. Antonelle the remainder of said funds; provided that the said Mrs. J.S. Antonelle shall, before that time, have obtained and delivered to the said Kennedy Shaw Lumber Company the written consent thereto of J.S. Antonelle, a member of said firm of Antonelle Doe."

Upon the execution of this agreement fifteen thousand dollars of the plaintiff's said money was paid over to the lumber company as agreed, but instead of crediting it on the claim in the suit against Antonelle Doe, and taking judgment against this latter firm for the balance due only, it gave no such credit, but proceeded with its suit, and some twenty days after this fifteen thousand dollars was paid, had judgment entered up against said firm for the full amount of its claim and interest, amounting to $36,713.74. If it had applied this fifteen thousand dollars as a credit on its claim when it was received, and taken judgment for the balance remaining unpaid, the amount of the judgment would have been but $20,488.69.

After the entry of such judgment the lumber company collected the amounts from the city hall and harbor commissioners, mentioned in the contract between plaintiff and the lumber company, aggregating $29,365.42. If the lumber company had taken judgment as above indicated, against said firm of Antonelle Doe for but $20,488.69, the application on such judgment of a sufficient amount received from the said commissioners to have discharged it, would have left a balance in the possession of the lumber company of $8,454.44, which, under the contract, would have been payable to the plaintiff, and to recover which amount this action is now brought, and from a judgment in her favor against the lumber company and the interveners, both the company and the interveners appeal.

The merits of each appeal will be separately considered, and taking up that of the lumber company first, the only points which it makes, aside from challenging some of the findings and insisting on errors of law, are, — 1. That as a condition to her right to maintain this action against the company, the plaintiff should have alleged and proved, the obtaining and delivery to it, of the stipulated written consent of J.S. Antonelle; and 2. That the contract to pay over to plaintiff this money, is illegal and void, because it is a promise to turn over to plaintiff the property of a third party — Antonelle Doe. It may be mentioned in passing that at the time this contract was entered into between the plaintiff and the said company, a suit for divorce between the plaintiff and her husband, J.S. Antonelle, was pending, and prior to the trial of this present action a decree of divorce had been entered. It is also a fact that plaintiff did not obtain, or deliver, to the company the said written consent of Antonelle, he having refused to execute it.

Now, to return to the merits of the appeal. Assuming that the stipulation on the part of the plaintiff to obtain Antonelle's consent was a condition precedent, it is well settled that such conditions are not favored by the law, and are to be strictly construed against one seeking to avail himself of them.(Front-Street R.R. Co. v. Butler, 50 Cal. 577; Deacon v.Blodgett, 111 Cal. 418.) More particularly does this follow, when a strict construction of such condition would work a forfeiture; a result which the law will always endeavor to prevent.

Equally is it true, that a party will not be permitted to insist on the performance of a condition precedent when, by his own act, or a departure from the terms of the contract, it is found he has prevented the performance of such condition. (1 Wharton on Contracts, secs. 312-603; Hawley v. Keeler, 53 N.Y. 121; Houghton v. Steele, 58 Cal. 421.) In the light of these principles, let us see what was agreed to be done by the parties, because, if plaintiff's right of recovery is to be measured by a compliance with the terms of the contract as a condition precedent, she has a right to equally insist, that all conditions which were to be performed by the lumber company, preliminary to her necessity of obtaining Antonelle's consent, should be also strictly performed. The same standard of measurement should be applied to the company that it holds out to the plaintiff, especially as it is urging a strict construction of the contract, and insists thereby on retaining money to which it has, itself, neither moral, nor meritorious legal claim.

Examining the contract then, the plaintiff was to obtain and deliver to the lumber company Antonelle's written consent that the "remainder" of a particular fund be paid to her. This "remainder" was to be determined in a designated method; no other method was provided for, and plaintiff did not agree to obtain Antonelle's consent to the payment of a sum ascertained in any other way. Immediately upon receipt of the fifteen thousand dollars defendant proceeded to violate the contract, and pursued a method which not only did not create any "remainder" in plaintiff's favor, but, by its process of applying plaintiff's money, made it impossible that there should ever be any "remainder." It did not credit the payment on the claim, but took judgment for the entire debt. In fact, by its process of violating the agreement, instead of there being any "remainder," there was a deficiency of upwards of six thousand dollars. It neither literally nor substantially complied with the contract; it ignored it entirely.

The plaintiff doubtless anticipated, that by immediately deducting from its claim in suit the fifteen thousand dollars paid by her, that the judgment to be taken by the company for the amount then "due and unpaid," would be so much less than the sums to be obtained by the company from the city hall and harbor commissioners, that it would leave a remainder for her benefit. But by departing from the method prescribed for ascertaining it, the company itself made it impossible that there should be any, and hence, there was nothing under the terms of the agreement for Antonelle to consent to. The agreement, too, of the company to pay this money on the claim at once, thus reducing the amount for which judgment was to be taken, and to pursue the method devised for ascertaining and determining the "remainder of the fund," was as much a condition precedent, to be strictly followed, as was the agreement of plaintiff to obtain Antonelle's consent, and as the company prevented the ascertainment of such remainder, as provided by the contract and contemplated by the parties, its conduct operated as a discharge of the condition.

Counsel for the company admit that credit for the fifteen thousand dollars was "inadvertently omitted, and the judgment, therefore, appears to that extent in excess of the amount then actually due." This is an explanation, but the contract nowhere provides any excuse for these omissions. Immediate application of this money to the claim in suit, was the important stipulation in the contract; and it was this immediate credit, to lessen the amount of the possible judgment, upon which the hope of plaintiff for a return of any part of her money was based; it was the only way that there could possibly be a "remainder."

When conditions precedent are invoked, practically to work a forfeiture, there can be no inadvertence, or mistake, which will excuse non-performance of the exact conditions of the contract, performance of which were incumbent upon the party insisting on the stringency of the rule.

And this failure upon the part of the company to keep the terms of the agreement resulted to the disadvantage of the plaintiff in this, that it made it all the more difficult, if not impossible, to obtain Antonelle's consent. The evidence shows that he knew nothing of the agreement between the plaintiff and the company. If he had, he certainly would not have permitted the judgment which was taken against the firm, at least a year before all the money was collected from the city hall and harbor commissioners, to have been taken against it in an amount by fifteen thousand dollars too much. Such judgment, however, having been improperly taken and become final, it was only natural to suppose that he would not consent to the payment of this money to plaintiff (which he did not do) unless the company released the firm from the excess in the judgment obtained against it by the company's violation of the agreement with the plaintiff. This the company might or might not do. Whether it would or not is unimportant. If the contract had been performed on the company's part, as its terms required, there would have been no room for dispute between it and Antonelle about the judgment, and it is to be presumed that, if he had been justly treated, and the judgment satisfied out of the funds obtained from the commissioners, he would have consented to the return of the remainder to the plaintiff, as partial reimbursement for her money expended in his firm's behalf.

But aside from these considerations we are satisfied, that the stipulations of the parties in the contract upon this whole subject, were not conditions precedent, but, in effect, simply covenants. As said by Parsons, "Words of proviso and condition will be construed into words of covenant, when such is the apparent intent and meaning of the parties." (2 Parsons on Contracts, sec. 511.) "The whole context also of the document is to be considered. The effect of the condition cannot be determined without taking into consideration the stipulations that it qualifies, and it will be construed, as far as possible, so as to give efficiency to the entire contract. The construction depends upon the intention of the parties, to be collected in each particular case from the terms of the agreement itself, and from the subject-matter to which it relates. Whether a provision in a contract is a stipulation . . . . or a condition . . . . is to be gathered from the whole document." (Wharton on Contracts, sec. 555.)

The parties themselves speak of the "keeping of the covenants herein contained" and it is to be presumed they so considered them. It is the only fair way to look at the entire contract. It is not to be presumed, that the defendant intended to take any unconscionable advantage of the plaintiff when the contract was drawn; or that she, or it, intended that the payment of this money should depend upon the arbitrary will or caprice of Antonelle, in giving, or withholding, his consent. The contract does not specify what the consequences shall be if Antonelle does not consent. Is it to be assumed, or, does the good sense and clear construction of the contract warrant us in believing, that it was intended, as the result of plaintiff's inability to obtain Antonelle's consent, that the defendant should retain the money; that it should be forfeited to it? Certainly not. Upon the other hand, is it not more reasonable to believe, that it was intended by this proviso simply, that plaintiff covenanted to obtain Antonelle's consent, or, to be responsible for any damages resulting from her failure to do so? As said in Front-Street R.R. Co. v. Butler, 50 Cal. 577: "Courts are disinclined, as was observed by the court of appeals of New York (Tipton v. Feitner, 20 N.Y. 432) to construe the stipulations of a contract as conditions precedent, unless compelled by the language of the contract, plainly expressed. The reason of this disinclination is, that such a construction prevents the court from dealing out justice to the parties according to the equities of the case. The case at bar affords an instance of the injustice which would be wrought by such a construction of the contract of these parties." We have discussed this phase of the agreement between the parties, as far as we deem necessary, and while we are satisfied that it should be treated as a covenant, we are equally satisfied that as a condition precedent, the defendant, having violated every term of the contract under which Antonelle's consent was to be obtained, thereby discharged plaintiff from the obligation of obtaining it.

2. It is next insisted that the contract is illegal and void; that by agreeing to pay over to plaintiff the remainder of the funds to be collected on the assigned claims of Antonelle Doe, against the city hall and harbor commissioners, without its consent, the company agreed to commit a civil injury against that firm, and hence the agreement is invalid. The appellant does not seem to have presented this point, so far as the record shows, at any time until the filing of the closing brief on this appeal. Neither did any invalidity of the contract appear to have suggested itself until after the company obtained plaintiff's money. The contract seems to have been valid enough for that purpose, and, only an extreme solicitude for the interests of Antonelle Doe, now prompts appellant to endeavor to repudiate an agreement under which it has, so far, obtained all the advantage, upon the theory that it infringed on the rights of Antonelle Doe. But that firm, after their assignment, could have no possible interest in these funds, except to see that they were applied, when collected, on its debt to the company. It had made an absolute assignment of them for that purpose. Their validity was in litigation, and when collected in full, they would not pay the indebtedness due from it to the company by several thousand dollars. Under such circumstances, can it be said that the firm of Antonelle Doe had any interest in the funds, or that as to said firm there could be any surplus or remainder to which it would be entitled? On the contrary, for all practical purposes, the uncollected money was the property of the company, and it dealt with the plaintiff on that basis and in harmony with the fact. Had it believed that the firm of Antonelle Doe could have any probable future interest in these funds, it would undoubtedly have provided in the contract, not for the obtaining by plaintiff of the individual consent of J.S. Antonelle for their payment, but the consent of the firm of Antonelle Doe.

3. As to the sufficiency of the complaint. Plaintiff did not set forth the contract in her complaint in haec verba, nor make mention of the provision concerning the obtaining of Antonelle's consent. But the legal effect of the contract as plaintiff relied on it was pleaded, and the complaint stated a cause of action. On the trial the court admitted the contract in evidence, over an objection of the appellants, that there was a fatal variance between the pleading and the proof, and this is now relied on as error.

Under the code no variance is to be deemed material, "unless it has actually misled the adverse party to his prejudice in maintaining his action or defense upon the merits." (Code Civ. Proc., sec. 469; Carter v. Baldwin, 95 Cal. 478; Amador v.Amador, 114 Cal. 348; Stockton v. Glens Falls Ins. Co., 121 Cal. 171. ) As appellant set out the contract in full in its answer, and specially averred breach of this alleged condition precedent, it cannot be said that it was at all misled by plaintiff's failure to aver what it knew, what it pleaded, and what it relied on. Besides, when the legal effect of an instrument is pleaded, and any of its conditions are omitted in the complaint, the omission is cured, if the defendant in his answer sets forth the entire contract. (Cohen v. Knox,90 Cal. 266; Daggett v. Gray, 110 Cal. 169.) Defendant made this same point on its motion for a nonsuit, which was properly denied.

We have examined the evidence and findings to determine whether there is any merit in defendant's claim that some six of the latter are not sustained by the evidence, but find no merit in the contention, nor is there any merit in the alleged errors of law.

4. As to the claim of Antonelle Doe, that they are entitled to the money sued for: They consented to a judgment in favor of the lumber company for $36,713.74 and assigned all their interest in the funds to be collected from the boards of commissioners, and agreed that these, when collected, should be applied to the payment of the judgment. As to them, the judgment recovered by the company was final. The assignment of the funds for its payment was absolute, and as the assigned funds were less than the face of the judgment, those funds, as between the company and themselves, belonged to the former. If the company saw fit to agree with plaintiff, that in consideration of her paying fifteen thousand dollars on the firm's debts, it would agree to pay her the remainder of the funds ascertained in a certain way, that is no concern of Antonelle Doe. Besides, they are not parties to the contract between plaintiff and the lumber company. If the company has any money belonging to them, they must settle that with the company, leaving plaintiff and the company to an adjustment of their respective rights under their own contract.

5. As to the defendant Antonelle intervening in his own right, it is only necessary to say, that he never had a shadow of a claim, individually or otherwise, to any of the money paid by plaintiff upon his firm's indebtedness.

The judgment and order appealed from are affirmed.

McFarland, J., concurred.