Inman Mfg. Co. v. Am. Cereal Co.

• Decision Date: 17 January 1907
• Parties: INMAN MFG. CO. v. AMERICAN CEREAL CO.
• Court: Iowa Supreme Court

133 Iowa 71

110 N.W. 287

INMAN MFG. CO.

v.AMERICAN CEREAL CO.

Supreme Court of Iowa.

Jan. 17, 1907.

Appeal from District Court, Linn County; J. H. Preston, Judge.

Action to recover the purchase price for machinery erected by the plaintiff firm on the premises of the defendant company under a written contract. The defense was that the machinery was not in accordance with the requirement of the contract, that it should be satisfactory to the defendant; and there were counterclaims which need not be considered for the purposes of this opinion. The facts with reference to the contract and the efforts of the plaintiff to comply with it appear from the report of the case on a former appeal (124 Iowa, 737, 100 N. W. 860), in which a judgment on a verdict for plaintiff was reversed. This is an appeal by defendant from a second judgment on a verdict for plaintiff after a trial on substantially the same evidence (save on one point to be hereafter noted) as that presented in the former trial. Reversed.Dawley, Hubbard & Wheeler, for appellant.

Remley & Remley, Jamison & Smyth, and H. V. Borst, for appellee.

McCLAIN, J.

After the reversal in this court of the judgment for plaintiff on the former trial, plaintiff amended his petition by alleging that, at the time the original contract was made, plaintiff was informed by defendant, that, if the machinery referred to in said contract would do the amount of work specified and in the manner therein set forth, it would be satisfactory to defendant, and that defendant well knew it to be the understanding of plaintiff that plaintiff was only required by said contract to furnish machinery which should do the amount and quality of work therein required.

1. By overruling defendant's motion to strike the amendment to the petition above described; by admitting over defendant's objection the testimony of Horace Inman, a member of plaintiff firm, with reference to conversations between him and defendant's officers as to the meaning in which the terms of the contract requiring the machinery to be satisfactory to the defendant were used; and by the giving and refusal of instructions, the trial court held that it was competent for plaintiff to show that such terms were understood by the plaintiff in a different sense than that of the legal meaning which was given to them by this court on the former appeal, and that defendant's officers contracting for it understood when such contract was made, the meaning which plaintiff attached to such terms. The theory contended for by the appellee on the trial, and accepted by the trial court, was that it was competent to establish these facts under the provision of Code, § 4617, that: “When the terms of an agreement have been intended in a different sense by the parties to it, that sense is to prevail against either party in which he had reason to suppose the other understood it.” The first recognition of any such proposition as a specific rule of evidence, so far as we have been able to discover, is in Potter v. Ontario & L. Mut. Ins. Co. (1843) 5 Hill, 147, where Judge Bronson of the New York Supreme Court quotes it in the following language from Dr. Paley without specific reference: “Where the terms of a promise admit of more senses than one, the promise is to be performed in that sense in which the promiser apprehended at the time the promisee received it.” The rule next appears as the first portion of section 1697 of the Code of Civil Procedure of New York, as recommended for adoption in the final and complete report of the commissioners on practice and pleading of that state made in 1849. The Legislature of that state had previously adopted a Code of Civil Procedure reported by the same commissioners (appointed in 1847), which is generally known as the “New York Code of Civil Procedure of 1848” (see Hepburn Development of Code Pleading, 83); but in their final report of 1849 (drafted by Mr. David Dudley Field, one of their number), they added part 4, of Evidence, which had not been covered by the Code as previously reported and adopted, in which occurs the section already referred to, stating, as a rule of evidence, the principle announced by Judge Bronson, as borrowed from Dr. Paley, though in different language, as follows: “When the terms of an agreement have been intended in a different sense by the different parties to it, that sense is to prevail, against either party, in which he supposed the other understood it.” This reported Code seems not to have been adopted by the Legislature of New York, but it was, no doubt, the source from which the commissioners of Iowa, appointed in 1848 (see Code 1851, p. 470), “to draft, revise, and prepare a Code of laws for the state of Iowa,” with authority to “prepare a complete and perfect Code of laws, as nearly as may be, of a general nature only,” borrowed section 2401 of the Code reported by them to the Legislature in 1851, and adopted by it, and ever since known as the “Code of 1851.” The section of that Code just referred to, which has remained unchanged through successive codifications of our laws to the present time, is identical in language with the provision in the New York reported Code, as above quoted. That such borrowing from this reported New York Code took place is further indicated by the incorporation in the preceding two sections of the Code of 1851 of provisions found in other sections of the New York reported Code, in almost identical language. Indeed, it is well known that the Codes of the states of Missouri (1849), California (1850), Kentucky (1851), Indiana (1852), Ohio (1853), and Wisconsin (1856), and the territories of Minnesota (1851), Oregon (1854), Washington (1854), and Nebraska (1855), were to a large extent borrowed from the New York Code. See Hepburn, Development of Code Pleading, 93-103.

Although the New York reported Code of Civil Procedure of 1849 (published in 1850), which first contained the provision above quoted did not become an enacted Code, the provision itself, as announced in the case of Potter v. Ontario & L. Mut. Ins. Co., supra., was specifically recognized by the New York courts as a rule of law as well as of ethics. See Hoffman v. Ætna Fire Ins. Co., 32 N. Y. 405, 88 Am. Dec. 337;White v. Hoyt, 73 N. Y. 505; Johnson v. Hathorn, *41 N. Y. 476. And, on the authority of these New York cases, the rule has been recognized elsewhere as common law. People v. Auditor General, 17 Mich. 161;American Loan & T. Co. v. Toledo, C. & S. R. Co. (C. C.) 47 Fed. 343;Potter v. Berthelet (C. C.) 20 Fed. 240;Kendrick v. Life Ins. Co., 124 N. C. 315, 32 S. E. 728, 70 Am. St. Rep. 592. Therefore, while the rule with us is statutory, it is, after all, only an announcement of a principle of common law. It was so held in Peterson v. Modern Brotherhood, 125 Iowa, 562, 101 N. W. 289, 67 L. R. A. 631. And we may therefore look to the application of the rule as at common law to determine its proper interpretation as a statutory provision. An examination of the cases already cited will show that the common-law rule has been limited in its application to cases in which there has been a controversy arising under a contract in ambiguous language, or in which some mistake or uncertainty has appeared with reference to the subject-matter to which the language is sought to be applied. The rule has never been recognized as authorizing the interpretation of plain and unambiguous language of a written instrument in accordance with any other meaning than that indicated by the words used in the instrument. The rule is thus limited in 2 Parsons, Contracts (9th Ed.) *498, where this language is used: It may be true, ethically, that a party is bound by the meaning which he knew the other party to intend, or to believe that he himself intended (citing Potter v. Ontario & L. Mut. Ins. Co., supra, and the passage from Paley's Moral and Political Philosophy, there quoted); but certainly this is not always legally true. Thus, in the cases already supposed, he who was to give might know that the party who was to receive (a foreigner, perhaps, unacquainted with our language) believed that the promise was for “oxen” when the word “horses” was used; but, nevertheless, an action on this contract could not be sustained for “oxen.” So, if he who was to pay money knew that the payee expected compound interest, this would not make him liable for compound interest as such, although the specific sums payable were made less because they were to bear compound interest. In all these cases, it is one question whether an action may be maintained on the contract so explained, and another very different question, whether the contract may not be entirely set aside, because it fails to express the meaning of the parties, or is tainted with fraud; and, being so avoided, the parties will then fall back upon the rights and remedies that may belong to their mutual relations and responsibilities. These must be determined by the evidence in the case; and the very contract, which as a contract, could not be enforced, may perhaps be evidence of great importance as to the rights and liabilities of the parties. And to the same effect, see 2 Page, Contracts, § 1127; 4 Wigmore, Evidence, § 2466. So as to an analogous rule, that the construction put by the parties upon the instrument is to be taken into account, it is said: “Where there is doubt as to the proper construction of an instrument, this feature of the case is entitled to great consideration; but, where its meaning is clear in the eye of the law, the error of the parties cannot control its effect.” Railroad Co. v. Trimble, 10 Wall. (U. S.) 367, 19 L. Ed. 948. In illustration of similar principles, see Mowatt v. Lord Londesborough, 3 E. & B. 307, 77 E. C. L. 307; Smith v. Hughes, L. R., 6 Q. B. 597; Raffles v. Wichelhaus, 2 H. & C. 906. In this last case, often referred to as the case of the “Peerless” the question was as to which of two consignments of...