Jones v. Lanier

• Decision Date: 08 June 1916
• Docket Number: 6 Div. 188
• Citation: 198 Ala. 363,73 So. 535
• Parties: JONES v. LANIER.
• Court: Alabama Supreme Court

73 So. 535

198 Ala. 363

JONES v. LANIER.

6 Div. 188

Supreme Court of Alabama

June 8, 1916

Rehearing Denied Dec. 30, 1916

Appeal from Circuit Court, Jefferson County; C.B. Smith, Judge.

Action by S.H. Jones against Sterling S. Lanier. From judgment for defendant, plaintiff appeals. Affirmed.

McClellan J., dissenting

Finch &amp Pennington, of Jasper, and J.S. Gillespie, of Birmingham, for appellant.

Stokely Scrivner & Dominick, of Birmingham, for appellee.

SAYRE J.

This was an action by appellant against appellee to recover damages for the alleged breach of an agreement by which appellee assumed to take and pay for the entire output of appellant's Baker's Creek mine for nine months at a stipulated price per ton, subject to appellant's coal "proving entirely satisfactory" to appellee. The complaint alleged that plaintiff expended large sums of money in opening his mine and in the purchase of machinery and mules wherewith to carry out his contract, and did mine and furnish to defendant under the contract a large quantity of coal which was accepted by defendant. There was, however, no averment that defendant had breached the contract by failing or refusing to pay for any coal delivered to him. The breach alleged was that after the parties had acted under the arrangement for about four months the defendant gave notice that the contract was canceled and that he would not accept or pay for any more coal. In the first count of the complaint plaintiff laid his damages "in the loss of profits that he would have made in the sale of the coal that he would have mined and furnished the defendant under said contract." The report will show the first count as amended. In the other counts plaintiff claimed damages in the loss of profits he would have made, and besides on account of money expended as aforesaid. It thus appears that two questions were raised on the face of the record, to wit, whether plaintiff had a cause of action for unearned profits, and whether, in default of that, he might recover for money expended in preparing to mine coal for defendant. Both items were not recoverable, of course, since a recovery of profits, estimated as upon the complete execution of the agreement according to the original understanding of the parties, would have necessarily included expenditures for preparation, less the values they left in the hands of plaintiff at the time the work on the contract ceased. Worthington v. Gwin, 119 Ala. 44, 24 So. 739, 43 L.R.A. 382. Defendant's contention is that by the agreement he was constituted the sole judge whether or not plaintiff's coal was satisfactory, and for that reason he cannot be held liable on any account. One of his grounds of demurrer to the complaint also took the point that the so-called contract left it with him to determine how much coal he would take.

Such agreements, like all others, are enforceable according to the true intent of the parties. If a party voluntarily assumes the obligations and risks of an agreement by which he undertakes to furnish labor and material for a compensation, the payment of which is made dependent on a contingency so hazardous or doubtful as the approval or satisfaction of the other party, his legal rights are to be determined according to its provisions fairly construed, and against the consequences resulting from his bargain the law can afford him no relief. McCarren v. McNulty, 7 Gray (Mass.) 139. The difficulty of such cases lies in ascertaining the real intention of the parties. Rules laid down for such cases are really rules of interpretation, and these are applied according to the situation of the parties and the purposes they may appear to have had in view when entering into the contract. This court seems to have accepted this general proposition, that to justify one party in his rejection of labor performed and material furnished by the other on the ground that they were not satisfactory, as the contract provided they should be, it must appear that the party seeking to avoid payment, according to the stipulation on his part, was in good faith dissatisfied and for some better reason than that he merely desired to avoid liability. Electric Light Co. v. Elder, 115 Ala. 138, 21 So. 983; Worthington v. Gwin, supra; Higgins Mfg. Co. v. Pearson, 146 Ala. 528, 40 So. 579. This doctrine is generally stated in substantially this form, that, to avoid liability after performance, the dissatisfaction of the party for and to whom work is done and material furnished must be genuine and caused by such defects or omissions as would cause a reasonable man to be dissatisfied. 3 Page on Contracts, § 1390. But it is commonly held that where the contract involves things intended to satisfy personal taste or feeling the party to whom they are furnished is the free and exclusive judge whether they are satisfactory; and substantially the same rule seems to be maintained in cases where machinery or special appliances have been furnished and the party to whom they are furnished, after fair test, alleges his dissatisfaction with their mechanical utility or operative fitness for the purposes intended. Electric Light Co. v. Elder, supra; 3 Page on Contracts, supra; 9 Cyc. 618-620; 6 R.C.L. p. 953, § 334.

Defendant contracted--if contract there was--to take the output of plaintiff's Baker's Creek mine, and upon this alone it might appear that he bound himself to take the coal from that mine whatever its quality. But he also exacted the stipulation, which occupied the leading place in his contract and upon which his obligation was made to depend, that plaintiff's coal should prove entirely satisfactory. Assuming that the paper writing set out in the complaint discloses the entire meaning of the agreement into which the parties entered, it may be that plaintiff could not, on this record, avoid the full effect of this stipulation according to its prima facie import. At any rate, the defendant in his fourth plea averred that the coal was purchased for resale, which fact was known to plaintiff, and that on account of the quality of the coal, he (defendant) was unable to sell any more of it to his customers, and for this reason it was not satisfactory. This averment, if sustained by the jury, introduced a new element into the construction of the agreement in virtue of which at least, very clearly, we think, defendant had a right to countermand further shipments, in effect, to rescind the contract as for a lack of performance on plaintiff's part.

Plaintiff's claim in this case is affected by another consideration--the uncertainty of the alleged contract. The court will lean to that construction which will make the contract certain; but it cannot set up a contract for the parties. Pretermitting the requirement that the coal should be entirely satisfactory, defendant's proposal amounted to this, that he would take and pay for all coal as it might be mined and tendered by plaintiff. But by neither the express terms nor the legal effect of the alleged agreement was plaintiff bound to mine any coal. Of course the parties expected and intended that plaintiff would operate his mine; but the extent and result of that operation was not fixed by the contract. For aught appearing on the face of the contract, its execution was optional with plaintiff. Had he not operated his mine at all, or had he found it unprofitable and for that or any other reason ceased to operate it at any time during the nine months, defendant could not have recovered damages for his failure. This results from the principle that where no breach of a contract could be assigned which could be compensated by any criterion of damages furnished by the contract itself, the contract is void for uncertainty. Pulliam v. Schimpf, 109 Ala. 179, 19 So. 428; Elmore, Quillian & Co. v. Parrish Bros., 170 Ala. 499, 54 So. 203. At the time of entering into the contract, each of these promises, such as they were, being then executory, constituted the sole consideration for the other. Eskridge v. Glover, 5 Stew. & P. 264, 26 Am.Dec. 344; Comer v. Bankhead, 70 Ala. 136; Howard v. E.T., V. & G.R.R. Co., 91 Ala. 268, 8 So. 868. Defendant would have had the right, therefore, to cancel the agreement at his option at any time before he received a benefit under it or plaintiff suffered legal detriment by performance on his part. Authorities last above. When, however, the party not bound nevertheless performs in reliance upon the understanding, his performance raises a new consideration for the promise of the other party. The contract, so to speak of the agreement in this case, had it been certain, would have been severable, that is, defendant would have had no right to claim a discharge of the whole on the ground that plaintiff may have furnished small quantities of unsatisfactory coal. But it was uncertain, and defendant assumed no legal obligation in respect of any quantity of coal until it was tendered, and then it was subject to rejection if not entirely satisfactory. In other words, defendant had the right at any time to cancel the contract, subject only to liability to the extent plaintiff had already performed it satisfactorily. Howard v. E.T., V. & G.R.R. Co., supra. It results from these principles and the nature of the contract alleged in the complaint that, as matter of law, the plaintiff was not entitled to recover on account of profits he would have earned on coal he would have mined, and this conclusion it is the duty of the court here to enforce, however the question is presented. Pulliam v. Schimpf, supra.

The cases upon which plaintiff relies do not sustain his right to recover unearned profits in the circumstances of the case at hand. In Worthington v. Gwin the plaintiff had entered into a definite undertaking to mine and...