City of Bridgeport v. Aetna Indemnity Co.

The receiver's primary objection to the allowance of the city's claim, or any part of it, is that at the time of his appointment on January 7th, 1911, there was no accrued liability arising under the bond which it gave to the city, since at that time the city had suffered no loss by reason of the By-Products Company's breach of its contract. This objection is not well founded. The By-Products Company's contract with the city was an entire and indivisible one. When that Company ceased operations and refused to receive further garbage, it committed a breach of that contract. The breach was one of a dependent covenant going to the whole consideration, and therefore total.Kauffman v. Raeder, 47 C.C.A. 278, 286, 108 F. 171, 179; Leopold v. Salkey, 89 Ill. 412, 418. A cause of action in favor of the city thereupon arose for the recovery of the damages consequent upon such breach. It might have brought suit immediately, or waited such length of time as the statute of limitations permitted, but only one action could be brought, and in that action, whenever brought, full recovery, covering the future as well as the past, could be had. Cohn v.Norton, 57 Conn. 480, 490, 18 A. 595; Stanton v. NewYork Eastern R. Co., 59 Conn. 272, 283, 22 A. 300;Pierce v. Tennessee Coal, I. R. Co., 173 U.S. 1, 13,19 Sup. Ct. 335; Parker v. Russell, 133 Mass. 74, 75;Schell v. Plumb, 55 N.Y. 592, 597; Sutherland v. Wyer,67 Me. 64, 68; Remelee v. Hall, 31 Vt. 582, 585; 1 Sedgwick on Damages (9th Ed.) § 90; 1 Sutherland on Damages (4th Ed.) § 108.

The fact that it was uncertain and would, in the nature of the case, remain uncertain until the expiration of the period of the contract, what the amount of the damages resulting from the breach would prove to be, would not stand in the way of such full recovery, nor convert the city's claim as to the future into a contingent one. It would be unliquidated, but there is a wide difference between an unliquidated claim and a contingent one. A demand is none the less an accrued or matured one for being unliquidated. ChemicalNational Bank v. Hartford Deposit Co., 161 U.S. 1, 10,16 Sup. Ct. 439; Hartford Deposit Co. v. Chemical NationalBank, 58 Ill. App. 256, 258.

Neither would it interfere with recovery that it could not be shown that damage had actually been suffered at the time suit was brought or the hearing had. If it was shown that it was reasonably certain that loss or damage would result in the future, recovery could be had for that.

It makes no difference that the liquidation of the damages suffered by the city from the breach, in so far as the future was concerned, would be beset with difficulties. Those difficulties are the same in kind and no greater in degree than are frequently encountered in actions for personal injuries. Pierce v. Tennessee Coal,I. R. Co., 173 U.S. 1, 16, 19 Sup. Ct. 335; In re Stern, 54 C.C.A. 60, 63, 116 F. 604, 607; East Tennessee,V. G. R. Co. v. Staub, 7 Lea (75 Tenn.) 397, 406. Uncertainties that may arise from an inability to forecast correctly what the future has in store for a plaintiff whose rights have been invaded by a breach of contract or a tort, do not suffice to convert his right of action into a contingent one, or to bar him from recovery as of a matured and accrued claim.

In the present case the city, months before a receiver was appointed, had an actionable, and therefore accrued, claim against the By-Products Company for the entire amount that it was damaged by reason of the breach of its contract. The Indemnity Company stands in the same position with respect to liability for the city's claim as did the By-Products Company. Its liability was a contingent one until the contract had been breached. The moment that the breach occurred its liability became a fixed and absolute one and, within the limits of the penal sum of the bond, was measured by that of the By-Products Company. New YorkSecurity Trust Co. v. Lombard Investment Co., 73 Fed.Rep. 537, 550; Loeser v. Alexander, 100 C.C.A. 89, 94, 176 F. 265, 270.

The receiver and his counsel refer to the following cases in support of their contention that the city's claim should be disallowed as unaccrued at the time of the former's appointment. Attorney-General v. Equitable Accident Ins. Asso., 175 Mass. 196, 55 N.E. 890; Dean Sons' Appeal, 98 Pa. 101; In re Equitable ReserveFund Life Asso., 131 N.Y. 354, 30 N.E. 114; People v.Commercial Alliance Life Ins. Co., 154 N.Y. 95,47 N.E. 968; People v. Metropolitan Surety Co., 205 N.Y. 135,98 N.E. 412; People v. Metropolitan Surety Co.,211 N.Y. 107, 105 N.E. 99.

No one of these cases is in point. In all of them it was held that the liability of the corporation against which the claim was filed, which was originally contingent, remained so, and did not become fixed until after the law's assumption of control of the affairs of the corporation in insolvency or receivership proceedings for the purpose of distributing its assets among its creditors. In the first four the claims presented arose out of insurance policies, fire or life, in which the obligation to pay was made dependent upon the contingency of loss by fire or death, and the contingency had not occurred when the court assumed jurisdiction. No one of the several claimants at that time had a right of action, and as a consequence it was held that they did not have provable claims.

In the fifth case, to wit, People v. Metropolitan SuretyCo., 205 N.Y. 135, 98 N.E. 412, the insolvent corporation in the receiver's hands was a surety company which had given its bond whereby it undertook to pay on demand to the plaintiff, in an action in which the defendant's property was attached, the amount of any judgment which might be recovered against him not exceeding a sum named. Thereupon, and before such judgment was rendered, a receiver of the surety company was appointed. Judgment having been rendered subsequently, a claim for its amount was presented to the receiver, and rejected by the court on the ground of its nonmaturity at the time the receiver was appointed. It was held that as the contingency, whose happening would alone fix the liability, had not accrued prior to the receivership, there was no accrued claim.

The decision in the last case, to wit, People v. MetropolitanSurety Co., 211 N.Y. 107, 105 N.E. 99, rested upon the same principle. A bare majority of the court, in opposition to a vigorous minority opinion, held that the liability under the building contract bond in that case was, by reason of its provisions, made contingent upon the rendition of a judgment against the contractor for his default, and that as such judgment had not been rendered prior to the receivership proceeding, the claim should be disallowed as not accrued. The minority strenuously contended that the only condition precedent to liability under the bond was a default by the contractor, which had occurred prior to the receivership, and that thereby the claim had become fixed and absolute. The controversy that thus divided the court is not explainable upon any other theory than that the decisive factor in the case was whether or not the contingency, whose occurrence fixed the liability, occurred before or after the receiver's appointment.

The present case differs from all those cited on behalf of the receiver, in the vital and controlling matter that the event, whose happening was, by the terms of the contract, to constitute a breach of it, and create a consequent liability for the resulting damage to the city, occurred some months prior to the receivership proceedings, and that the Indemnity Company's liability thereby became an accrued and absolute one, remaining to be liquidated only. It was therefore provable in the receivership proceedings. Wells v. Hartford ManillaCo., 76 Conn. 27, 32, 55 A. 599; Lothrop v. Reed, 95 Mass. (13 Allen) 294, 298; Chemical National Bank v.Hartford Deposit Co., 156 Ill. 522, 528, 41 N.E. 225.

Another claim made on behalf of the receiver is that the committee erred in finding, upon the subordinate facts found by him, that the By-Products Company committed a breach of contract when, on May 11th, 1910, it ceased to operate, and refused to receive any more garbage. This claim is supported by the contention that the By-Products Company was justified in its then action by reason of the city's continuing conduct in delivering to it garbage which contained foreign matter, in violation, as it is said, of its duty under the contract. We fail to find in the contract, whether by express provision or fair implication from its terms, any undertaking on the part of the city to deliver garbage which should be free from foreign matter. By it the city undertook to collect and deliver at the By-Products Company's plant all the garbage and offal accumulated in the city which it legally could. For the purpose, doubtless, of indicating the scope of this undertaking, the contract included a statement of what was meant by "garbage and offal." In no other way could it be made to appear clearly what the city had agreed to do. The By-Products Company's undertaking, on the other hand, was to reduce the garbage and offal thus agreed to be delivered, or in certain contingencies to bury it. It does not appear that the city, either directly or inferentially, agreed to deliver the garbage free from foreign substances, or that the By-Products Company might decline to receive for reduction the garbage in case that it was not so free. The finding of the committee that it was practically impossible to collect the city's garbage without including with it some foreign matter, that the percentage of such matter in the garbage actually delivered was a reasonable amount to be found in any municipal garbage, and that it could not be expected that garbage delivered to a reducing plant by a city would contain less foreign matter than that which was delivered to the By-Products Company did contain, indicates what must have been the intention of the parties when the contract was executed and the interpretation to be given to its terms, in the absence of express provision upon the subject to the contrary.

It is also urged that the committee erred in finding a breach by the By-Products Company in the face of its letter of July 14th, 1910, and its notice filed with the city clerk on July 29th, 1910. We have no occasion to inquire what these two communications disclose of the Company's then attitude in respect to its contract with the city, or what the city was reasonably entitled to infer therefrom that its attitude was. Whatever it was, and however willing it may then have been to carry out the contract according to its true intent and meaning, they came too late to nullify the unqualified breach of which the Company had been guilty more than two months prior, and to restore to life the contract so broken, and treated and acted upon by the city as broken and at an end by the Company's act, as it well knew. The city's cause of action for that breach had accrued, and the only possible bearing that a subsequent offer to perform could have, would be in the matter of the assessment of damages. Gould v. Banks Gould, 8 Wend. (N. Y.) 562, 567.

It appears by the committee's report that frequently after 1907 all of the dead animals within the city were not delivered by it to the By-Products Company, so that its sales of hides were somewhat reduced. It does not appear that complaint was ever made of this failure until the letter notifying the city of the Company's intended suspension of service, or that the attention of the city authorities was ever called to it. In so far as appears it continued for about three years, and the city, if it was cognizant of the fact, might well have assumed that the omission was agreeable to the Company or at least that it waived its rights in that respect. The committee was justified in holding, as it did, that this matter did not furnish a sufficient excuse for the Company's rescission of the contract.

The receiver and his counsel further charge that the committee's finding that the damage to the city, by reason of the By-Products Company's breach of contract, was $20,786.09 was erroneous, since that amount, as they say or assume, was arrived at by multiplying the tonnage subsequent to January 7th, 1911, by fifty cents, the difference between the charge for reduction under the Fischer contract and that under the Winton contract. The trial court in its memorandum adopted this view, and apparently it furnished the chief reason which actuated it in rendering the judgment it did. It is quite true that such a method of computing the damages, unexplained, would appear to be without justification, since the undertaking of Fischer, for which the agreed payment was to be $1 per ton, was a different one and one apparently more favorable to the city in some respects than that of the By-Products Company under the Winton contract, which called for payment at the rate of fifty cents per ton. But we examine the committee's report in vain for foundation for the claim that the committee arrived at the amount of damages by any such method. It may be quite true that it did; but the record does not so inform us, and the court below, whose source of information was confined to the committee's report, was equally without that information. The report states that the damages were $20,786.09, and there stops. It is altogether silent as to the method employed by the committee in reaching this conclusion and as to the evidence bearing upon the assessment of damages that was before him. Not only is this the situation, but there is in the report an entire absence of facts from which a deduction as to the committee's method of computation could by possibility be made.

Counsel for the receiver, in their brief, say that the only effort which the city made to furnish the court with information with which to measure the damages recoverable, was by the introduction of the Fischer contract. The record contains no information to that effect. We fear that the court below was misled by statements made in its presence, or otherwise, into the belief that the report contained more than it does. Containing, as the report does, only the ultimate conclusion that the damages amounted to the sum named, it cannot be said that the court erred in reaching it.

If the receiver was of the opinion that the committee had erred, as the brief filed on his behalf states, or otherwise, either in adopting a wrong rule for the measurement of damages or in erroneously applying the right rule, he should have remonstrated against the acceptance of the report and asked for its recommitment for its amplification, so that it would show what rule the committee did adopt and how he proceeded in applying it.

There is error, the judgment is set aside and the cause remanded to be proceeded with according to law.

In this opinion the other judges concurred.