Floyd v. Pugh

• Decision Date: 15 November 1917
• Docket Number: 6 Div. 441
• Citation: 77 So. 323,201 Ala. 29
• Parties: FLOYD et al. v. PUGH.
• Court: Alabama Supreme Court

77 So. 323

201 Ala. 29

FLOYD et al. v. PUGH.

6 Div. 441

Supreme Court of Alabama

November 15, 1917

Rehearing Denied Dec. 24, 1917

Appeal from City Court of Birmingham; H.A. Sharpe, Judge.

Action by John C. Pugh against S.H. Floyd and another for breach of contract. From a judgment for plaintiff, defendants appeal. Affirmed.

The agreement is as follows: Dean & Floyd have heretofore bought of Pugh 497 shares of the capital stock of the Security Life & Accident Insurance Company, at the par value of $4,970, and certain furniture to the sum of $75. Dean & Floyd have received the said stock and furniture in full. Of the sum due Pugh they have paid him $2,045, the remaining $3,000 to be paid upon the following terms: First, he shall make good and satisfactory bond to said Floyd & Dean, or the Interstate Fire Insurance Company as they may be advised in the sum of $2,000, to secure the Interstate Fire Insurance Company from all claims outstanding against the Security Life & Accident Insurance Company, and then the sum shall be paid in cash. Second, if said bond shall not be made, then the sum of money shall not be paid him until and unless he shall satisfy all claims outstanding against the Security Life & Accident Insurance Company. Third, if said Dean & Floyd, or either of them, or the Interstate Fire Insurance Company, shall advance said Pugh in money to secure the claims outstanding against the Security Life & Accident Insurance Company, then the sum of money so advanced shall be deducted from the sum of money to be paid said Pugh. Fourth, the money due said Pugh shall not bear interest, nor shall the money advanced him bear interest.

Nathan Miller and Needham A. Graham, Jr., both of Birmingham, for appellants.

Harsh Harsh & Harsh, of Birmingham, for appellee.

THOMAS J.

The plaintiff's complaint was in three counts. The first and second alleged and claimed for the breach of a dependent agreement, and the third was the common count.

The agreement, which is set out in haec verba in the first count shows that the accrual to plaintiff of the $3,000 was dependent: (1) Upon plaintiff's making good and satisfactory bond in the sum of $2,000, to secure the Interstate Fire Insurance Company from all claims outstanding against the Security Life & Accident Insurance Company; or (2) alternatively, if such bond should not be made, then upon plaintiff's satisfying all claims outstanding against said Security Life & Accident Insurance Company. The third important express provision of the agreement was that if the said Dean and Floyd (appellants) should advance to the said Pugh any money wherewith to secure the claims outstanding against the Security Life & Accident Insurance Company, then the sum of money so advanced should be deducted from the sum of money to be paid to the said Pugh (plaintiff-appellee).

In response to defendants' demurrer, which was sustained by the court, plaintiff amended counts 1 and 2, by the addition of the words:

"He satisfied or

caused to be satisfied all claims referred to in said contract outstanding against the Security Life & Accident Insurance Company."

Demurrer was reassigned to the counts as amended.

Are the averments of said counts to the effect that neither the defendants nor the Interstate Fire Insurance Company advanced to plaintiff the money with which to satisfy said claims, or that plaintiff "satisfied or caused to be satisfied all the claims referred to in said contract"? If by failing to make the bond provided, or to satisfy all of said claims, he caused the defendants or the Interstate Fire Insurance Company to advance the money to satisfy said claims, then the sums so advanced must be deducted from the sum of money to be paid to the plaintiff; and if such sums so advanced by defendants or the Interstate Fire Insurance Company exceed the sum due under the contract, there could be no forfeiture of the terms thereof. Under the last alternative of the counts as amended do the counts show an accrued cause of action? Counts of a complaint must be tested by the weakest averment. Nat. Park Bank v. L. & N.R.R. Co., 74 So. 69 (19). For, if the plaintiff failed to satisfy said claims as he had contracted to do, and by reason of such failure the defendants or the Interstate Fire Insurance Company was caused to satisfy all the claims referred to, in a sum equal to or in excess of $3,000, the plaintiff's claim for that amount could never accrue. The fulfillment of the condition precedent by plaintiff must be averred to show the liability of defendants consequent upon such discharge by him of his part of the agreement. Clinton Min. Co. v. Bradford, 192 Ala. 576, 584, 585, 69 So. 4; Fike v. Stratton, 174 Ala. 541, 558-560, 56 So. 929; Terrell v. Nelson, 177 Ala. 596, 58 So. 989; Bellinger v. State, 92 Ala. 86, 88, 9 So. 399; Flouss & Kennedy v. Eureka Co., 80 Ala. 30; Vincent v. Rogers, 30 Ala. 471.

In Root v. Childs, 68 Minn. 142, 146, 70 N.W. 1087, 1088, the court said:

"Where the obligation of a party to a contract is to pay only upon the happening of a contingency, e.g., the return of an instrument duly recorded, such contingency is in the nature of a condition precedent, and its occurrence must be alleged in the complaint. Wilson v. Clarke, 20 Minn. 318 (367). But if payment is not to be made if a contingency happens during its continuance, e.g., if the party is enjoined from using the article which is the subject-matter of the contract, he is not to pay the purchase price until the injunction is dissolved, the contingency is in the nature of a condition subsequent, and it is not necessary to allege in the complaint the nonhappening or noncontinuance of the contingency. 1 Chit.Pl., 320."

In Fogg v. Sub. Rap. Transit Co., 90 Hun, 274, 276, 35 N.Y.Supp. 954, 955, the court said:

"But by the express phraseology of the provision it is manifest that it was a condition precedent, because it says that this evidence is to be furnished to the party of the first part [the defendant] before the party of the second part [the plaintiffs] 'will demand or shall receive the sums due upon final payment under this agreement.' It would be difficult to see how a condition precedent could be expressed in more apt or appropriate terms. Such provisions in respect to architects' certificates have always been held to be conditions precedent. And if we were in need of authority for the support of this proposition, we have it in the case of Weeks v. O'Brien, 141 N.Y. 199 ."

This is the rule of pleading conditions precedent in complaints, recognized in Clinton Mining Company Case, supra. The rule is formulated by Chief Justice Anderson, in Fike v. Stratton, supra, as follows:

"We think the true test, however, whether it be called an 'exception' or 'proviso,' is whether or not it is a condition precedent to liability, or whether or not it is a condition subsequent going to defeat the plaintiff's action once vested, or if the existence or nonexistence of the condition is essential to a breach of the contract, or merely affords a defense for a failure to comply with same or for a breach of same. If it is a condition precedent, it should be set forth in the declaration, and can be met by a general denial. If it is not a condition precedent to a breach, but merely justifies or excuses a breach in certain instances or for certain causes, it is defensive matter, which need not be negatived or set out in the declaration. Tyson v. Weil, 169 Ala. 558, 53 So. 912 [Ann.Cas.1912B, 350]. We think the third clause of the contract in question was intended to indemnify the owner of the house by way of liquidated damages against a delay in completing the building, but exempts or relieves the contractor from liability in case the delay was beyond his control. In other words, the proviso was intended as a defense in a certain instance to a right of action vested upon a breach by delay, and is not a condition precedent. 'Every case depends upon the nature of the stipulation or condition, as well as upon the form of it.' "

This line of authority is well grounded on older cases finding expression by Mr. Gould, in his excellent work on Pleading, as follows:

"Whenever, therefore, the right of recovery depends upon a condition precedent, the declaration must aver performance of it (or what is equivalent to performance), to entitle the plaintiff to recover. For in every such case, performance of the condition, or what the law holds equivalent to it, is a constituent and indispensable part of the right of action, or that, without which there can be no cause of action. *** But in declaring upon a covenant, or upon articles of agreement an exception (if there be any), in the body of the covenant, etc., must be set out, and the subject-matter of the exception must be excluded from the breach assigned. Tom Jones' Report, 125; Esp.Dig. 300. If then A.

covenants to convey to B. a certain farm, except one particular close, B. in an action on the covenant must state the exception, as well as the rest of the covenanting clause, and in assigning the breach must aver that A. has not conveyed the farm, except the one specified close. For the exception enters into the description of the covenant, and the corresponding exception in the assignment of the breach is necessary to show that the breach is within the covenant. *** But if A. covenants to convey to B. a certain farm, with a separate proviso, that on A.'s performing a certain act, he shall not be bound to convey one particular close, parcel of the farm, B. in declaring on the covenant need not take notice of the proviso. 1 Sir Thomas Raymond's Reports, 65; 1 Levinz's Eng. King's Bench Report, 88; Esp.Dig. 300. For it does not enter into the description of the covenanting clause, on which the

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