Hudson v. Archer

• Decision Date: 10 October 1896
• Parties: E.E. HUDSON, G. R. Scougal, and Newton Edmunds, Plaintiffs and appellants, v. W.S. ARCHER and G.A. Archer, Defendants and respondents.
• Court: South Dakota Supreme Court

9 S.D. 240

68 N.W. 541

E.E. HUDSON, G. R. Scougal, and Newton Edmunds, Plaintiffs and appellants, v. W.S. ARCHER and G.A. Archer,

Defendants and respondents.

South Dakota Supreme Court

Appeal from Circuit Court, Yankton County, SD

Hon. D. Haney, Judge

Affirmed

C. H. Dillon, R. B. Tripp, Yankton, SD

Attorney for appellants.

French & Orvis, Yankton, SD

Attorneys for respondents.

Opinion filed Oct. 10, 1896

CORSON, P. J.

This was an action to recover damages for breach of contract. Judgment was rendered for the plaintiffs for nominal damages only, and they appeal. The action is based upon the following contract:

“This memorandum of agreement, made at Yankton, Dakota, this 18th day of June, A. D. 1887, by and between W. S. Archer of Dayton, Ohio, and G. A. Archer, of Yankton, Dakota, parties of the first part, and G. R. Scougal, Newton Edmunds and E. E. Hudson, of said Yankton, as agents and trustees of the persons whose names are subscribed to a subscription to a fund to secure the erection of an oil mill, a copy of which is hereto attached, parties of the second part witnesseth: That the said parties of the first part hereby agree and promise to erect in said Yankton an oil mill of dimensions not less than the following: … That they will operate said mill, and maintain therein at least the amount of machinery herein mentioned, for a period of five years from this date, provided that the said parties shall not be held to operate said mill during any time when, for causes not under their control, said mill cannot be operated without loss to them, they using at the time due economy and all proper skill. The said parties of the first part further agree that they will not, during the period above named, sell or transfer the said mill or the machinery therein unless the parties receiving such transfer or conveyance shall bind themselves, to the satisfaction of the said parties of the second part, to observe and fulfill the terms of this agreement. The said parties of the second part hereby promise and agree that they will pay, or cause to be paid, to the said parties of the first part, the sum of fifteen hundred dollars, as follows: $500 on the arrival at said Yankton of the machinery above named, and $1,000 when the said mill has been completed according to the terms of this agreement, and the machinery has been set up therein, and the mill made fully ready to be put in operation for the manufacture of linseed oil. In witness whereof the said parties have hereunto set their hands, on the day and year first above written.”

The plaintiffs in their complaint, allege breaches of the contract as follows:

“That the said defendants, on or about the 7th day of June, 1889, sold and transferred said mill, machinery, and business to the Yankton Linseed Oil Company, without the consent or satisfaction of said plaintiffs, and without any agreement on the part of said company to observe or fulfill the terms of said contract between the plaintiffs and the defendants, and that thereafter, on the 1st day of October, 189, in violation of the terms of said contract, the oil mill and machinery ceased to be operated or maintained, and the said business has not been conducted by said defendants, or otherwise, since that date; … that, by reason of the premises, the consideration for the payment of said sum of $1,500 has failed, and the plaintiffs are entitled to recover the same of the defendants, with interest from the date last mentioned; that no part of said sum has been paid. Wherefore, the plaintiffs demand judgment against the defendants for the sum of $1,500, with interest thereon from the commencement of this action, and for such other and further relief as shall be just and proper and for costs and disbursements herein.”

The case was tried to the court without a jury, and it found the facts substantially as alleged in the complaint. The court also found that on or about October 1, 1889, said mill and machinery. together with a large quantity of flax seed, linseed oil, and other products manufactured in said mill, were totally destroyed by fire, without fault or negligence on the part of the defendants or of the Yankton Linseed Oil Company.

“(6) For causes not under their control, the defendants could not have operated said mill more than they did, from the time it was first put in operation until it was destroyed, as aforesaid, without loss to them—they using, during the time, due economy and all proper skill; and, for causes not under their control, there has never been a time since said mill was so destroyed when the same could have been rebuilt and operated without loss to the defendants and said Yankton Linseed Oil Company, they using due economy and all proper skill; nor for reasons not under their control, has there been any time since said mill was destroyed when the same could have been operated without loss to the said company, it using due economy and all proper skill.”

The court thereupon stated its conclusions of law as follows:

“(1) There was a breach of the contract on the part of defendants, in that they transferred the mill and machinery to the Yankton Linseed Oil Company, without obtaining from said company a contract satisfactory to plaintiffs, and binding such company to observe and fulfill the terms of the contract with plaintiffs. For this breach the measure of damage is the amount which will compensate the parties for all the detriment approximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom. Comp. Laws, § 4581.

(2) It appears from the contract itself that the persons who furnished the $1,500 did so with the expectation and for the purpose of receiving such benefits as would result to them, as citizens and property owners in Yankton, from the erection and operation of an oil mill in that city. A mill as contemplated, was erected and operated for a portion of the time specified in the contract. Consequently the subscribers received a portion of the expected benefits. Conceding that defendants, by transferring the mill in violation of the contract placed it beyond their power to further comply with the contract, or conceding that the findings of the court are erroneous as to the ability of the defendants or the Yankton Linseed Oil Company to rebuild and operate the mill without loss, still the conclusion must follow that there was a partial performance of the contract, and that a portion of the benefits contemplated by the contract was received by the subscribers. If this view be correct, the detriment caused by the breach, either in respect to the transfer, or the failure to longer operate the mill, must be the loss of benefits contemplated by the parties, and not received. As these are not clearly ascertainable in their nature and origin, and as no evidence was offered tending to prove any facts by which the court might determine the amount of damages sustained by the subscribers, plaintiffs can only recover nominal damages. Comp. Laws, § 4581.”

The appellants contend: First, That the contract was an entire one, and as the court finds that the defendants violated the same by transferring the property without the consent of the plaintiffs, and without the guaranty binding the grantee, to the satisfaction of the plaintiffs, to observe and fulfill the terms of said contract and agreement, the plaintiffs are entitled to recover back the entire consideration paid. Second, That the defendants having transferred the property to a corporation without complying with the terms of said agreement, before the time for full performance had expired, and. thereby put it out of their power to fulfill the terms of the same, a right of action at once accrued to the plaintiffs. Third, That evidence tending to show that defendants could not have operated the mill for the balance of the time, after said transfer, except at a loss, was incompetent, irrelevant, and inadmissible; and that such evidence and the findings of the court based thereon cannot affect plaintiff’s right to recover in this action the consideration paid. The contention of the respondents is fully stated in the court’s conclusions of law.

There was no express stipulation in the contract that the defendants should have the right to transfer said property, but there is an implied agreement that they might do so upon the conditions therein specified, namely, that the grantee should give security to the satisfaction of the plaintiffs that he would fulfill the terms of the contract. Any transfer of the property, therefore, without a compliance with the conditions of the contract, was clearly a breach of the same, as the defendants, by such transfer, put it out of their power to comply with the terms of the agreement. The court therefore very properly found that there was a breach of the contract on the part of the defendants by a transfer of the property.

The contention of the appellants that the contract in controversy is an entire one, and that the failure to comply with its terms entitles them to...