Milske v. Steiner Mantel Co. , 103 Md. 235 ( 1906 )

This is an action of covenant based upon a sealed agreement between the parties to the suit dated June the 1st, 1903. The suit was originally instituted in the Circuit Court for Baltimore County, but was subsequently removed to the Court of Common Pleas. By leave of the Court, the plaintiff, on the 19th of June, 1905, filed an amended declaration which contained three counts, each of which purported to assign breaches of the agreement committed by the defendant. The defendant demurred to each count of the declaration. The Court sustained the demurrers, with leave to the plaintiff to amend, which he declined to do, and thereupon the Court entered judgment on the demurrers in favor of the defendant. From this judgment the plaintiff appealed. The record, therefore, presents this one question; was the Court's ruling upon the demurrers correct?

The circumstances which gave rise to the suit are as follows: The defendant corporation contemplated the erection of a brick factory and store house to be located in Baltimore County, and to that end had plans and specifications for the construction of the work prepared. The contract was awarded to the plaintiff on the 1st of June, 1903, and he obligated himself to complete the work in forty-seven working days. During the course of the erection and construction of the building, and when the same had been almost completed, it was blown down on the 12th of July, 1903, by a storm of unusual violence and severity which swept over the section of the county in which the building was located. It was made a condition precedent to the awarding of the contract to the plaintiff that he should enter into a bond to the defendant, in conjunction with a surety company satisfactory to the defendant, as surety, conditioned for the faithful performance of the contract. There was also stipulation in the contract that as the work advanced to certain stages of completion the plaintiff should be paid certain specified sums. When the storm of the 12th of July, 1903, demolished the building, an installment of fifteen hundred dollars due the plaintiff under said provision of the contract was unpaid.

The proposition for which the plaintiff contends is that under the contract between himself and the defendant all losses, or damages which resulted to the building from the storm of July 12th, 1903, which the narr. describes as an "act of God," must be borne by the defendant, and that he, the plaintiff, has a right under the contract to recover all such losses and damages to said work as he may be able to show he sustained by reason of the storm. The first and third counts are based solely upon this contention. The second count presents a different question, and will be considered later. The first count seeks to recover an unpaid installment of fifteen hundred dollars, and also the value of the materials used in the construction of the building, which it alleges were retained and used by the defendant. The third count alleges that "the defendant was bound to suffer and stand good for the loss from an `act of God' and the plaintiff was relieved from any loss so incurred, and that the defendant was under an obligation to bring the building to the stage of completion to which it had progressed at the time it was destroyed." Under this count the plaintiff seeks to recover profits on the contract, the unpaid installment of fifteen hundred dollars, and the value of the materials used in the work.

The theory upon which the plaintiff seeks to maintain these counts is that the bond and building contract are to be taken together as constituting the agreement by which the rights and duties of the respective parties to the suit must be determined, and that inasmuch as by the third condition contained in the bond given by the plaintiff and the American Surety Company it is provided: "That the principal shall not, nor shall the surety be liable for any damage resulting from an act of God," it is argued that thereby the obligations asserted in the first and third counts were imposed upon the defendant, and that upon this conception of the character and meaning of the contract the pleader has introduced verbatim into each count of the narr. the agreement and bond. It, therefore, appears that the question presented involves an inquiry as to what was the contract entered into between the parties, and what were he rights and obligations arising thereunder.

It is needless to quote authorities to show that in the construction of a contract the intention of the parties as it appears from the whole agreement must be ascertained and given its full effect. The rule of construction was stated, with great clearness, in Nash v. Towne, 5 Wallace, 699, as follows: "Courts, in the construction of contracts, look to the language employed, the subject-matter, and the surrounding circumstances. They are never shut out from the same light which the parties enjoyed when the contract was executed, and, in that view, they are entitled to place themselves in the same situation as the parties who made the contract, so as to view the circumstances as they viewed them, and so to judge of the meaning of the words and of the correct application of the language to the things described."

When the contract for the construction of the factory and the store-house is looked at in the light of these principles, the contention of the plaintiff that the covenants and conditions of the bond, which the plaintiff was required to give for the faithful performance of his duties, are to be read into the contract, and to be taken, not only as narrowing and limiting his obligations under his agreement with the defendant, but as imposing new and additional duties upon the defendant, cannot for a moment be entertained. The plaintiff undertook to do a certain, definite thing, towit, the erection and completion of a factory and store-house according to the plans and specifications furnished by the defendant. These plans and specifications constituted a part of the contract. He was to do all the work, and furnish all the materials to be used in and about the erection of the building, and was to do the work in a good and thorough workmanlike manner. He further obligated himself to have the building completed and ready for the business for which the same was to be erected in a specified number of days. Upon the performance by the plaintiff of all the covenants on his part to be performed, the defendant agreed to pay to the plaintiff the sum of $8,794.50 in the following installments, viz., $500 when the building is completed to the first floor, and the first floor joists are laid; $1,000 to be paid when the building is completed to the second floor, and the second floor joists are laid; $1,000 to be paid when the building is completed to the third floor and the third floor joists are laid; $1,500 to be paid when the building is completed to the roof and the roof is placed upon the same; $500 to be paid when the flooring on the first floor is laid and trimmed out; $500 to be paid when the flooring on the second and third floors each is laid and trimmed out. The balance of $3,294.50 to be paid when the building is completed in accordance with said plans and specifications, and same delivered to said party of the second part free of all claims by the party of the first part or any party claiming through him. There is also a stipulation that on the signing of the contract the plaintiff should execute a bond in the sum of four thousand dollars with some responsible bonding company satisfactory to the defendant, "conditioned for thefaithful performance of his duties in the erection of saidbuilding."

These are the main and substantial provisions of the contract. It is an absolute and unconditional contract on the part of the plaintiff. There are no conditions, or contingencies incorporated, or provided for therein by which he might be excused from performance, or might be relieved from loss, or damage, or whereby the loss occasioned by the storm mentioned in the declaration might be imposed upon the defendant. The bond was given, not to vary, or change in any particular the obligations of the plaintiff under the contract, but to secure the faithful performance by him of all the duties assumed by him thereunder. Its object was to protect the defendant from loss, or damage which might result from non-performance by the plaintiff, and cannot be construed to add to, or change any of the terms of the contract, or to be taken as a part thereof. When the purpose of the contract, its subject-matter, and the surrounding circumstances at the time are considered, it would seem to be perfectly clear that the bond is an entirely independent and collateral contract given to protect the defendant against anydefault or miscarriage of the plaintiff under the contract. The original obligation to construct the building had been undertaken by the plaintiff, and the bond must be treated as a contract of guaranty, or suretyship for the faithful discharge of his duties under his agreement with the defendant. That the original and distinct obligation of the plaintiff existed, and that the bond was a mere collateral agreement founded upon it, appears clear from the language employed, and from a consideration of the surrounding circumstances. The bond may, therefore, be dismissed from the case, and should not have been introduced into the declaration.

With the bond out of the case, it must be admitted that the plaintiff cannot recover for the loss which the storm occasioned, for by all the authorities, in the absence of special provisions in the contract providing for such a contingency, the loss must fall upon the plaintiff. In both counts the contract is treated as a subsisting, binding obligation. Neither alleges performance by the plaintiff, nor does either disclose any legal excuse for his failure to perform the contract. The theory upon which both counts rest is that the failure of the defendant to pay the losses which the plaintiff sustained by the storm constitutes a breach of the contract from which a right of action accrued to the plaintiff. This contention, as we have said, is based upon a fallacious construction of the contract, and as both counts are framed upon that construction, both are bad.

They are bad for a further reason which will be stated when the second count is considered, which we will now examine. The contract sued on is an entire, and not a divisible contract. The thing with which it deals is the building and construction, in a certain specified manner, of a factory and warehouse. But it contains certain stipulations by which the defendant obligated itself to pay to the plaintiff certain specified and definite sums of money at stated periods as the work progressed. When the building had reached the stage of completion designated in the contract, the obligation of the defendant to pay the sums specified therein became fixed and absolute. But it is argued that because the contract is an entire contract no suit can be brought thereon until the plaintiff has fully performed his agreement. Whatever may be the rule in other jurisdictions, the mere fact that the contract isentire does not preclude the plaintiff from enforcing the payment of the unpaid installments due and payable thereunder. InBroumel v. Rayner, 68 Md. 50, this Court said: "In Taylor v. Laird, 1 Hurst Nor. 273, POLLOCK, C.B., determined that when there is a contract for an entire service, but the parties stipulated that payments for such service shall be made periodically in fixed sums, a failure to make any one of these payments may become the foundation for a suit. Thus it is manifest that many suits may grow out of one contract. This principle has been recognized in all of the States."

Notwithstanding the destruction of the building by the storm, the defendant was under an obligation to permit the plaintiff to perform his contract by rebuilding the structure. In Black v.Woodrow Richardson, 39 Md. 215, JUDGE ALVEY said: "It not unfrequently occurs, that contracts on their face and by their express terms appear to be obligatory on one party only, but in such cases, if it be manifest that it was the intention of the parties, and the consideration upon which one party assumed an express obligation, that there should be a corresponding and correlative obligation on the other party, such corresponding and correlative obligation will be implied. Thus, if the act to be done by the party binding himself can only be done upon a corresponding act being done or allowed by the other party, an obligation by the latter to do or allow to be done the act or things necessary for the completion of the contract will be necessarily implied. Churchward v. The Queen, 6 B. S., 807. And among the instances given of such implied obligation, is the case where A covenants or contracts with B to buy an estate of the latter, at a given price, there, although the contract may be silent as to any obligation on the part of B to sell, the law implies a corresponding covenant or contract by him to sell and convey the estate. Pordage v. Cole, 1 Wms. Saund. 319. Indeed, no better instance of the proper application of the principle could be furnished than the present case. The appellee agreed with the appellant to build for the latter a house on his land for a certain price, part to be paid while the house was in course of erection, but the larger part of the price was not to be paid until the house was completed; although the appellant could not be compelled to have the house built against his consent, yet, notwithstanding the contract is silent as to the appellant's promise that he would suffer the house to be built, the agreement with the appellees for the building of the house clearly implies that he would allow that to be done, without which it would be impossible for the appellees to do what they had agreed to do. To allow or suffer the house to be built was the corresponding or correlative obligation of the appellant, implied by the law to the obligation of the appellees to build the house, as expressed by the contract; and for any breach of this implied promise or obligation by the appellant, he was equally liable as upon an express promise."

It is, therefore, clear that if, before the building had been destroyed by the storm a definite sum of money was due to the plaintiff under the stipulation of the contract, for work done, and which the defendant refused to pay, and if, after the occurrence of the storm, the plaintiff was ready and willing to rebuild said factory and warehouse according to the terms of the contract, and was prevented by the defendant from so doing, two distinct breaches of the contract were thereby committed by the defendant, for both, either of which a right of action accrued to the plaintiff. For both of said alleged breaches the plaintiff seeks to recover in this suit. But he has combined the two distinct causes of action in one count of his declaration. He seeks to recover for the failure to pay the installments due, and also to recover damages for the refusal of the defendant to permit him to perform the contract. This vice is found in all the counts. The whole declaration is a flagrant example of duplicity in pleading. Chitty on Pleading, 225; Poe on Pleading, vol. 1, secs. 733-737. This defect in pleading may now be taken advantage of by a general demurrer. Stearns v. The State,81 Md. 341; State v. McNay, 100 Md. 625.

We, therefore, find no error in the action of the Court below in sustaining the demurrers to each count of the declaration, and in entering the judgment for the defendant upon the refusal of the plaintiff to amend the declaration. But if the facts set out in the record be true, the plaintiff has substantial grounds of action against the defendant, and it would be a reproach to the administration of justice if he were denied the right to have his case heard upon its merits merely because of errors in the pleading, or mistake of judgment in the pleader in not making the proper amendments. In order to avoid such injustice, it is provided by Art. 5, § 22, Code, 1904, as follows: "In all cases where judgment shall be reversed or affirmed by the Court of Appeals, and it shall appear to the Court that a new trial ought to be had, such new trial shall be awarded, and a certified copy of the opinion and judgment of the Court of Appeals shall be transmitted forthwith to the Court from which the appeal is taken, to the end that said cause may be again tried as if it had never been tried; and no writ of procedendo, with transcript of record, shall be transmitted, as heretofore practiced."

It was said in Creager v. Hooper, 83 Md. 504, that under the above quoted section, "this Court is vested with discretionary power when in its judgment the ends of justice will be promoted, to remand a case to the lower Court for trial upon its merits. This is manifestly a case for the exercise of its discretion. The merits of the controversy have never been passed upon by the Court, nor has the case ever been in the condition that they could be passed upon, and not to remand it would be neither more nor less than a denial of justice." The case of theState, use of Dodson v. The Baltimore Lehigh R.R. Co.,77 Md. 489, presented a situation very similar to the one under consideration. In that case the plaintiff had filed an amended declaration to which the defendant demurred. The Court sustained the demurrer and entered judgment for the defendant. The plaintiff appealed. This Court held the pleading insufficient, and affirmed the judgment, but remanded the case for trial upon its merits. JUDGE BRYAN, who delivered the opinion of the Court, said: "We think it just, under the circumstances, to remand the case, in order that the declaration may be amended, and the case be brought to trial on its merits, although we shall affirm the judgment." The circumstances of this case, in our opinion, warrant the exercise of the discretionary power vested in this Court under the Act.

Judgment affirmed and cause remanded for a new trial, theappellant to pay the costs.

(Decided March 27th, 1906.)