Dorsey v. Oregon Motor Stages , 183 Or. 494 ( 1947 )

As I view it, the first so-called finding of the trial court quoted at the outset of this court's opinion is not a finding of fact. A conclusion without a basis of fact upon which it may be founded is a nullity.

The second finding is contradicted by the only testimony in the record on the subject.

In my opinion, to take an agreement to which the plaintiff was not a party and which was voluntarily executed by the defendant and the Government, and by its terms attempt to prove that it was executed under governmental coercion and hence is a complete release and exoneration of all obligation or duty under the terms of a contract with plaintiff solemnly executed in writing nine months and twenty days theretofore, is extending an invitation and opportunity to all contracting parties to avoid the obligation of their solemnly executed contracts by merely making a different contract with a third party and reciting therein statements that, if true, would excuse the performance of or compliance with the contract first executed.

As I view it, the question is not whether the agreement between defendant stages and the Government contained or did not contain certain statements. Certainly, one not a party to it, and in this case the plaintiff was not a party to defendant's contract with the Government, should not be charged with its terms or the statements contained therein. The question is whether coercion or duress on the part of the Government was employed to force defendant to enter into the contract. The representative of the Government affirmatively testified that there was no such or any coercion.

In my opinion, it makes no difference whether this is a proceeding at law, or one that should be governed by the rules of equitable procedure. I think that, because the only testimony in the record is to the effect that there was no coercion, neither a court of law nor a court of equity has any right to release, discharge or acquit defendant of its duty to perform either its expressed or implied covenants as reflected in the contract with plaintiff.

There is affirmative testimony by the plaintiff himself that he understood the term "schedules" to be synonymous with the word "traffic". I can come to no other conclusion than that the representatives of the defendant were fully aware that plaintiff so understood it. I cannot conceive of any one situated as plaintiff was when his contract with defendant was executed assenting to a contract that was to be unalterably governed by the technical meaning of the term "schedules". In other words, I believe, when he signed the contract, plaintiff understood that at least five of his busses would be given preference over all other conveyances used in local traffic between Corvallis and Camp Adair, except only busses owned by plaintiff. I am also firmly convinced that the representatives of defendant knew that plaintiff so understood the contract. There is no express denial in the record of that fact.

The argument based upon the testimony of experts as to the technical meaning of the word "schedules" fails to convince me that any one with a modicum of common sense finding himself in the situation of plaintiff seeking and requiring employment for his five busses would have signed away his sole and only objective and purpose and thereby voluntarily put himself wholly at the mercy, whim or caprice of defendant's director of cars to determine what, if any, employment he might have.

As I understand the opinion of this court, it is to the effect that despite the fact that the only testimony in the record in that respect is testimony given by the Government's representative affirmatively stating that there was no coercion or duress attendant upon the execution of the contract by defendant stages with the Government, nevertheless, the trial court was justified in holding that there was such coercion or duress; and that because of such coercion and duress, the defendant stages was exonerated and relieved from performing not only the express terms of its contract with plaintiff, but also with its implied covenants to cooperate with plaintiff in supplying plaintiff the means by which plaintiff would be enabled to receive the benefits and avails therein granted to him.

With due respect to all who differ, I cannot concur with either of those pronouncements.

The opinion of the court cites and quotes from the case ofRoxford Knitting Co. v. Moore Tierney, 265 Fed. 177, 11 A.L.R. 1415. In that case, it is shown that under the provisions of an act of Congress, the president was empowered in time of war or national emergency by proclamation to place "orders" for war supplies and such orders were made obligatory on any person to whom such orders were given. The congressional act provided that such orders should take precedence over all other orders and contracts theretofore placed with such persons. There were four separate orders given to plaintiff. Upon the fulfillment of those orders plaintiff based its right to recover for goods furnished defendant in part performance only of a contract with defendant and the court upheld plaintiff's recovery. In the case at bar, there is no controlling act of Congress even suggested and no presidential order based thereon. Instead thereof, as stated, there is affirmative testimony by the Government representative that there was no coercion.

The case of Wischhusen v. American Medicinal Spirits Co.,Inc., 163 Md. 565, 163 A. 685, also cited in the opinion, is a case wherein defendant, a distiller of intoxicants, applied for a permit to operate its plant. Plaintiff, Wischhusen, had been hired for a year by defendant as an expert in the manufacture of whiskey. A month after hiring plaintiff, defendant discharged him because the Government notified defendant that plaintiff was unsatisfactory to the Government for the reason it believed that he was not trustworthy or competent and further the Government gave defendant notice that no permit would issue to defendant allowing him to continue the operation of his distillery until the position was filled by one who is entitled to the full confidence of the Government. Hoping to be forgiven for saying so, I think duress, coercion and governmental authority in that case was doubly distilled. As I view it, that case has no relevancy to the facts in the case at bar.

Neither has the quoted statement from that case of the four recognized exceptions to the rule that where impossibility of performance after the formation of a contract the failure of the promisor to perform is not excused, nor has the quotation there made from Section 458, p. 852 of Vol. 2 of the Restatement of the Law of Contract dealing with prevention of performance (a) by the Constitution or Statute of the United States or by the constitution or statute of any one of the United States or by a municipal regulation, or (b) by judicial, executive or administrative order. None of these interdictions is even remotely suggested by its counsel as affecting the action of defendant in the instant case.

The same may be said of the quotation from the case of HelenaRubinstein, Inc. v. Charline's Cut Rate Inc., 132 N.Y. Eq. 254,28 A.2d 113, with reference to the mandate of the Emergency Price Control Act.

I fail to find from the testimony that the United States required defendant to lease and use the government owned semitrailers. The most that may be said in that regard is that there is testimony in the record that such requirement would have been exacted if defendant had declined to contract for the use of the seventeen semitrailers of the Government; but actually no such requirement was communicated to defendant by the representatives of the Government.

Mr. F.E. Landsburg, whose duties in connection with the Office of Defense Transportation included the rationing of motor vehicles and also the handling of transportation emergencies, which arose during the time involved in this case, testified as a witness for defendant.

On cross-examination concerning the contract by virtue of which the seventeen semitrailers of the Government were used by defendant, Mr. Landsburg was asked:

"Q Was any compulsion exerted by your office on Oregon Motor Stages to take this contract?

A No, I can't say any compulsion was exercised directly because we were very much opposed to using compulsion in the first place, and it wasn't necessary in the second place. In other words, to put equipment there, the command was able to make a satisfactory contract with Oregon Motor Stages, and they accepted it, and that dropped us out of the picture, and we only checked to see if it was going all right. If Oregon Motor Stages said they wouldn't take it, there would have been compulsion; we would have had to come in and authorize another carrier to serve the camp."

Continuing Mr. Landsburg's cross-examination, the following questions were asked and answers thereto were given as follows:

"Q That compulsion would have consisted in your authorization to another carrier to rent those busses and perform this same service?

A Not rent the busses, but enter into a contract to operate the busses.

Q The compulsion would have consisted in giving another carrier the right to do what you first extended to the Oregon Motor Stages?

A That's right.

Q No more and no less?

A We would probably have issued a certificate to that carrier to serve the camp in addition to having them run the equipment.

Q The effect on Oregon Motor Stages if they had not wished to take the contract would have been the result of getting a competitive carrier for that particular business?

A That's right, for that is a military reservation and the command could have said to that company, `You will not come into this camp — you will stop entry'.

Q Do you know whether the Command or your office ever said that to Oregon Motor Stages?

A No, they didn't say it to Oregon Motor Stages, but they did say it to the Northwest Coast Lines at Lewis.

Q But in negotiating this particular matter, there was no such threat made, is that right?

A That's right."

Mr. Carl Wendt, transportation engineer for defendant, was called as a witness for defendant, and just before his cross-examination was concluded, he testified as follows:

"Q But in entering into this particular contract, do you know of any threats or any compulsion that were taken toward Oregon Motor Stages to cause it to enter into this contract?

A None whatsoever. The only compulsion that entered into it was that we felt, as all other transportation felt, we must do as good a job as possible with what equipment they had available."

As to the contention made that the United States was not a third party within the meaning of and as understood and interpreted by the plaintiff and defendant in entering into the agreement of June 16, 1942, I think that it was not until April 15, 1943, that the first contract between the Government and defendant was executed. Its terms could not possibly have been interpreted or understood by either plaintiff or defendant on June 16, 1942. Moreover, in the first government contract, both the government representative and defendant herein are designated as parties. I quote: "Now therefore, the parties hereto do mutually agree as follows:" (Italics supplied.)

On April 5, 1944, a second contract, also designating the Government and defendant as parties thereto, was executed by said parties.

There is a well known principle applicable to contracts such as this imposing a duty upon the party who employs another to serve him. That is, the duty to cooperate with the one employed and not to prevent or hinder him in the performance of his part of the contract.

* * * "In any case where the plaintiff's performance requires the cooperation of the defendant, as in a contract to serve or to make something from defendant's materials or on his land, the defendant, by necessary implication, promises to give this cooperation and if he fails to do so he is immediately liable though his only express promise is to pay money at a future day." Excerpt from Section 1318, Vol. 5, Williston on Contracts (Williston Thompson Ed.) p. 3717, citing Rest. Contracts, Section 315; Lovell v. St. Louis Mut. L. Ins. Co. 111 U.S. 264, 274, 4 Sup. Ct. 390, 28 L. Ed. 423; Edwards v. Slate, 184 Mass. 317, 68 N.E. 342; Tournier v. National Provincial Bank, (1924) 1 K.B. 461, 12 Brit. Rul. Cas. 1021.

In the same section, it is said:

"Indeed, there is generally in a contract subject to either an express or an implied condition an implied promise not to prevent or hinder performance of the condition."

In the case at bar, it was only by cooperation with defendant that plaintiff's five busses could all be used before those of any other party were employed in transporting passengers from Camp Adair to Corvallis and from Corvallis to Camp Adair. As I read the record, defendant failed to accord plaintiff that co-operation.

Instead of cooperating with plaintiff to the end that its agreement to accord its traffic patronage between Corvallis and Camp Adair to the capacity of five of plaintiff's busses before employing the service of any third party's motor vehicles, defendant gave preference to the semitrailer service; and, because technically such service was known to the transportation guild as local schedules between Albany and Corvallis by reason of defendant's action in routing the semitrailer through Camp Adair rather than merely to it, defendant now insists that it fully complied with its agreement to give the specified preference to plaintiff's five busses, namely, preference in regard to traffic upon local schedules between Corvallis and Camp Adair.

By analogy, the doctrine of an English case, cited by Williston, seems to me to be in point. This case was decided 120 years ago. There, the defendant promised to make a lease to the plaintiff as soon as he should become possessed of the property which was then under lease to a third party. The defendant, before the expiration of the prior lease, executed another to the same lessee thereby preventing possession reverting to him at the expiration of the previous lease. Ford v. Tiley, 6 Barb. C. 325.

In principle, routing the seventeen semitrailers from Corvallis through Camp Adair to Albany and from Albany through Camp Adair to Corvallis to avoid giving the promised preference to plaintiff in respect to traffic between Corvallis and Camp Adair, is analogous to Tiley's execution of a second lease to the third party in possession under a former lease in order to avoid compliance with the agreement Tiley had made with Ford to lease Ford the premises as soon as he, Tiley, should become possessed of the property.

The English court found for plaintiff and Williston approves its holding.

* * * "In the absence of an express provision therefor, the law will imply an agreement by the parties to a contract to do and perform those things that according to reason and justice they should do in order to carry out the purpose for which the contract was made, and to refrain from doing anything which will destroy or injure the other party's right to receive the fruits of the contract." 17 C.J.S., Subject: Contracts, pp. 778-779, Section 328, citing marginal note 41 and 1947 Cumulative Annual Pocket Part; Uproar Co. v. National Broadcasting Co., C.C.A. Mass. 81 F.2d 373, modifying D.C. 8 F. Supp. 358; Kirke LaShelle Co. v. Paul Armstrong Co. 263 N.Y. 79, 188 N.E. 163; Parev Products Co. v. I. Rokeach Sons, D.C.N.Y. 36 F. Supp. 686, Affd. C.C.A. 124 F.2d 147; Mechanical Ice Tray Corp. v. General Motor's Corp. C.C.A.N.Y. 144 F.2d 720; Beuttas v. U.S. Ct. Cl. 60 F. Supp. 771; Universal Sales Corporation v. California Press Mfg. Co. 29 Cal. 2d 751, 128 P.2d 383; Brawley v. Crosby Research Foundation, 73 Cal. App. 2d 103, 166 P.2d 392; Price v. Spielman Motor Sales Co. 26 N.Y.S.2d 836, 261 A.D. 626; Halstead v. General Ry. Signal Co. 51 N.Y.S.2d 372, Affd. 52 N.Y.S.2d 660, 268 A.D. 106 0; Pappas v. Grist, 223 N.C. 265, 25 S.E.2d 850; Haley v. Bradley, 17 Wash. 2d 775, 137 P.2d 505, 146 A.L.R. 859.

See also: O'Neil Supply Co. v. Petroleum Heat Power Co. 280 N.Y. 50, 55, 56, 19 N.E.2d 676, 678, 679; Mansfield v. N.Y. Central R.R. Co., 102 N.Y. 205; 6 N.E. 386; M.L. Ryder Building Co. v. City of Albany, 176 N.Y.S. 456, 187 A.D. 868; Del Genovese v. Third Ave. R. Co., 43 N.Y.S. 8, 13 A.D. 412.

To be as frank as I can without appearing to be offensive, I find absolutely no testimony in this record to the effect that defendant was compelled to execute its contract with the Government. There is nothing that supports the attempted justification of defendant in failing to establish local schedules in order that its contract with plaintiff could not possibly be misconstrued. There is nothing in the record that supports the suggestion that plaintiff's services or the use of plaintiff's busses were deemed inimical to the interest or safety of the Government. In a word, I think that defendant's attempted defense has wholly failed.

Certainly its defense of coercion is not supported by substantial or any testimony. The implied covenant attendant upon all contracts, that there must be mutual cooperation on the part of both parties, has been shown by this record to have been violated by defendant. If the term "local schedules" is to be held to be controlling, there certainly was an implied covenant that defendant would cooperate by securing the establishment of such schedules. This defendant failed to do. Moreover, I cannot for one moment get my own consent to the suggestion that where the contract in suit was executed by plaintiff and defendant, plaintiff understood that the term "local schedules" restricted his right to participate only in the transportation of passengers pursuant to local schedules, nor can I persuade myself to think that the representatives of defendant were not fully aware of the construction plaintiff actually gave to that term.

Taking it by its four corners and considering it in its entirety, it is impossible for me to construe the contract in suit between plaintiff and defendant stages to mean anything else than that as to at least five of his busses plaintiff was granted a preference with respect to all local traffic between Corvallis and Camp Adair not served by busses owned by defendant at the time the contract was executed. To render effective this preference so granted, if it became necessary to establish and maintain local schedules between those two points and convey all of its local traffic pursuant to such local schedules only, there was an implied covenant that defendant would take that course.

There is not even a scintilla of testimony in the record that defendant complied with that implied covenant; but, on the contrary, the defendant asserts that it had a right to and did carry such local traffic in accordance with other schedules, namely, through schedules from Albany through Camp Adair to Corvallis and vice versa, and in that way plaintiff's busses were deprived of the preference granted plaintiff by the contract in suit. This, in my opinion, was a flagrant breach and violation of the implied covenant necessarily attendant upon the express grant by defendant to plaintiff of said preference; and, because of such breach, plaintiff was and is entitled to such damages as he sustained thereby.

I think the judgment and decree of the circuit court should be reversed and this cause should be remanded for an accounting.

For the foregoing reasons, I dissent.