Pressed Steel Car Co. v. Eastern Ry. Co. of Minnesota

• Decision Date: 23 March 1903
• Docket Number: 1,802,1,803.
• Citation: 121 F. 609
• Parties: PRESSED STEEL CAR CO. v. EASTERN RY. CO. OF MINNESOTA. EASTERN RY. CO. OF MINNESOTA v. PRESSED STEEL CAR CO.
• Court: U.S. Court of Appeals — Eighth Circuit

121 F. 609

PRESSED STEEL CAR CO. v. EASTERN RY. CO. OF MINNESOTA.

EASTERN RY. CO. OF MINNESOTA v. PRESSED STEEL CAR CO.

Nos. 1,802, 1,803.

United States Court of Appeals, Eighth Circuit.

March 23, 1903

Syllabus by the Court.

The sole purpose of the construction of a contract is to ascertain and enforce the intention of the parties-- the sense and meaning upon which their minds met when they made it-- and when this is discovered it prevails over verbal inaccuracies, inapt expressions, and the dry words of the agreement.

The intention of the parties must be deduced from the entire agreement, and not from any part or parts of it, because where a contract has several stipulations, it is plain that the parties agreed that their intention was not expressed by any single part or stipulation of it, but by every part and provision in it, considered together, and so construed as to be consistent with every other part.

Where the language of a contract is obscure or ambiguous, or its meaning is doubtful, so that it is susceptible of two constructions, that interpretation which evolves the more usual, reasonable, and probable contract should be adopted.

A car company agreed to make and deliver 400 cars to a railway company on or before April 1, 1900, subject to delays from unavoidable contingencies, but that, if it failed to deliver the cars within 'the time specified,' it would forfeit and pay to the railway company, as liquidated damages, $5 per day for every car so delayed.

Held 'the time specified,' in the damage clause, meant all the time specified for the delivery of the cars in the earlier part of the contract (that is to say, the time on or before April 1, 1900, plus the time during which the delivery might be delayed by the unavoidable contingencies), and the car company was not liable for the stipulated damages during that time.

When it is certain that some damages will result from delay in the performance of a contract, when those damages are incapable of exact ascertainment, or are based upon matters that are to a considerable degree uncertain, and when the amount stipulated is not, on the face of the agreement, out of all proportion to the probable loss, a contract to pay a sum certain for each day, week, or other definite period of delay beyond the time fixed by the contract for its fulfillment is a valid and enforceable agreement for the measurement of the damages, and is not a contract for a penalty.

When the last day within which a deed is to be performed falls on Sunday, that day is excluded, and the act may be done on the succeeding day.

In the computation of rents, interest, damages, or any other amounts, where a day, a week, a month, or any other definite period, is the agreed standard of measurement, every intervening Sunday, as well as every secular day, must be included and counted.

Jared How and Adrian H. Joline (John S. Ferguson, on the brief) for Pressed Steel Car Co.

W. E Dodge (M. D. Grover, on the brief), for the Eastern Ry. Co. of Minnesota.

These writs of error have been sued out to review the trial of an action brought by the Pressed Steel Car Company, a corporation, against the Eastern Railway Company of Minnesota, another corporation, to recover the unpaid part of the purchase price of 400 steel hopper ore cars, which the car company had made and delivered to the railway company under this contract:

'This agreement, made and entered into this 19th day of December, A.D. 1899, between the Pressed Steel Car Company of Pittsburgh, Pa., party of the first part, and the Eastern Railway Company of Minnesota, party of the second part.

'Witnesseth: that the party of the first part covenants and agrees to and with the party of the second part, to build for the party of the second part four hundred (400) steel hopper ore cars, to be delivered on or before April 1st, 1900, in accordance with the specifications, hereto attached and made a part hereof, and subject to the inspection of a representative of the party of the second part, and to deliver said cars on the tracks of either the P.C.C. & St. L. Ry. or P. & L.E. Railroad, or the P.F., W. & Co. Ry. or P. & W. Ry. Co., (our works) without cost to the party of the second part, except the purchase price hereinafter mentioned to be paid by the party of the second part. The delivery of these cars to be subject to delays in delivery of materials to be used in these cars, other than the first party's manufacture, and to strikes, fires, delay of carriers, or other unavoidable contingencies beyond the control of said first party. But it is agreed that in the event of the failure of the party of the first part to make and deliver the cars aforesaid within the time specified, then it shall forfeit and pay to the party of the second part as liquidated damages consequent upon such failure the sum of five dollars per day for each and every car so delayed after the said April 1st, 1900.

'In consideration whereof, the party of the second part covenants and agrees to accept said cars and to pay for the same the sum of eight hundred and seventy-five dollars ($875.00) each, to the party of the first part, such payments to be made in cash on delivery of each lot of one hundred cars.

'It is mutually understood and agreed, by and between the parties hereto that in case any future change or modification is made in said specifications, increasing or decreasing the cost of said cars, or any of them, the party of the first part will make the proper deduction from the above price for any such decreases, and the party of the second part will pay for any such increases.'

The plaintiff alleged that the amount of the purchase price remaining unpaid was $151,518.66 and interest. The answer of the defendant was that the plaintiff was so dilatory in delivering the cars that the damages for the delay which were stipulated in the contract amounted to more than the unpaid part of the price of the cars. None of the cars were delivered until May 29, 1900, and the delivery of the cars was not completed until June 28, 1900. The plaintiff alleged that this delay was caused by the unavoidable contingencies specified in the agreement. The court held that the plaintiff was liable for the stipulated damages for delays caused by these contingencies, as well as for delays caused by its own default or negligence, and instructed the jury that the defendant was entitled to damages to the amount of $5 per car for every secular day after April 2, 1900, that the delivery of the cars was delayed. The result was a judgment for the plaintiff for $29,186.26.

The car company complains of the trial because the court charged it with damages for delays in the delivery of the cars caused by the unavoidable contingencies, and the defendant is dissatisfied with the result because it was not allowed $5 per car per day for every Sunday as well as for every secular day that the delivery of the cars was delayed after April 1, 1900.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge, after stating the case as above, .

The grave question in this case is whether the Pressed Steel Car Company agreed to pay the railway company the liquidated damages stipulated in the contract during the time it was delayed in delivering its cars by the unavoidable contingencies named in the agreement, and that question must be determined by a fair construction of the contract.

The purpose of a written agreement is to evidence the terms upon which the minds of the parties to it meet when they make it. Hence the true end of all contractual interpretation is to ascertain that intention, and when it is found it prevails over verbal inaccuracies, inapt expressions, and the dry words of the stipulations. The court should, as far as possible, put itself in the place of the parties when their minds met upon the terms of the agreement, and then, from a consideration of the writing itself, its purpose, and the circumstances which conditioned its making, endeavor to ascertain what they intended to agree to do-- upon what sense or meaning of the terms they used their minds actually met. Accumulator Co. v. Dubuque St. Ry. Co., 64 F. 70, 74, 12 C.C.A. 37, 41, 42; City of Salt Lake v. Smith, 104 F. 457, 462, 43 C.C.A. 637, 643; Fitzgerald v. First National Bank, 52 C.C.A. 276, 284, 114 F. 474, 482.

The intention of the parties must be deduced from the entire agreement and from all its provisions considered together, because, where a contract has many stipulations, it is plain that the parties understood and agreed that their intention was not expressed by any single part or provision of their agreement, but by every part and stipulation, so construed as to be consistent with every other part and with the entire contract. Jacobs v. Spalding, 71 Wis. 177, 189, 36 N.W. 608; Boardman v. Reed, 6 Pet. 328, 8 L.Ed. 415; Canal Co. v. Hill, 15 Wall. 94, 21 L.Ed. 64; O'Brien v. Miller, 168 U.S. 287, 297, 18 Sup.Ct. 140, 42 L.Ed. 469.

Where the language of an agreement is contradictory, obscure, or ambiguous, or where its meaning is doubtful, so that the contract is fairly susceptible of two constructions, one of which makes it fair, customary, and such as prudent men would naturally execute, while the other makes it inequitable, unusual, or such as reasonable men would not be likely to enter into, the interpretation which makes it a rational and probable agreement must be preferred to that which makes it an unusual, unfair, or improbable contract. Coghlan v. Stetson (C.C.) 19 F. 727, 729; Jacobs v. Spalding, 71 Wis. 177, 186, 36 N.W. 608; Russell v. Allerton, 108 N.Y. 288, 292, 15 N.E. 391.

Let us consider the agreement of these parties in the light of these familiar canons of interpretation. The...