Sunset Shingle Co. v. Northwest Elec. & Water Works

• Decision Date: 21 January 1922
• Docket Number: 16457.
• Citation: 203 P. 978,118 Wash. 416
• Court: Washington Supreme Court
• Parties: SUNSET SHINGLE CO. v. NORTHWEST ELECTRIC & WATER WORKS.

203 P. 978

118 Wash. 416

SUNSET SHINGLE CO. v. NORTHWEST ELECTRIC & WATER WORKS.

No. 16457.

Supreme Court of Washington, En Banc.

January 21, 1922

Appeal from Superior Court, Grays Harbor County; Ben Sheeks, Judge.

Action by the Sunset Shingle Company against the Northwest Electric & Water Works. Judgment for defendant, and plaintiff appeals. Reversed and remanded, with directions to enter a judgment for plaintiff.

W. H. Abel, of Montesano, and Chadwick, McMecken Ramsey & Rupp, of Seattle, for appellant.

Burkheimer & Burkheimer, of Seattle, for respondent.

PARKER C.J.

The plaintiff Sunset Shingle Company commenced this action in the superior court for Grays Harbor county, seeking recovery of damages from the defendant Northwest Electric & Water Works claimed as the result of a breach of a contract by the defendant. The contract in question was entered into between them on February 3, 1915, looking to the electrification by the defendant of the plaintiff's manufacturing plant; the construction of a steam electric plant by the defendant on ground to be conveyed to it by the plaintiff, from which the defendant was to furnish to the plaintiff electric power to operate the machinery of its plant, and also steam heat to operate the dry kilns of its plant. The damages claimed by the plaintiff were for its loss from the diminished output of its plant during the years 1918 and 1919 because of the defendant's failure to furnish power in quantity as agreed; for its loss for the failure of the defendant to furnish steam heat in quantity as agreed to efficiently operate its dry kilns, in that the shipping weights of its products were not reduced to normal weights resulting in the necessity of paying excessive freight rates in the marketing of its products; expenses it was compelled to incur for repairs to certain of its machinery, which under the contract it was the duty of the defendant to make; and depreciation of the value of its mill plant because of the change of its power from steam to electricity as the result of the contract. The defendant by its answer denied that it had failed in any respect to do all that it was required to do by the terms of the contract, and denied that the plaintiff suffered any damages as the result of any such failure. These denials were followed by affirmative defenses set up by the defendant, which are in substance that it is a public service corporation 'furnishing electricity for light, heat and power for hire to the city of Montesano and its inhabitants'; that the service agreed to be rendered to the plaintiff is a public service; that the contract therefore is void because the agreed charge therefore constitutes an undue and unreasonable preference as against the public service customers of the defendant in violation of the regulatory provisions of our public service statutes. The cause was tried before the court sitting without a jury, and resulted in findings, conclusions, and judgment made and rendered in favor of the defendant, denying to the plaintiff recovery in any amount; the trial judge concluding as matters of law that the contract 'was made in violation of the statutes of the state of Washington' and 'is void and of no effect.' Following the findings and conclusions upon which the judgment was rested, the trial judge further found:

'(1) That the plaintiff performed the contract on its part. To which defendant excepts and exception allowed. * * *

'(2) That the defendant breached the said contract upon its part and because of the defendant's said breach the plaintiff suffered loss and damage in the sum of $67,764.32. To which defendant excepts and exception allowed.'

These findings were evidently made to the end that they might become the basis of a judgment to be rendered in favor of the plaintiff in the event of this court holding upon appeal that the contract, the breach of which is claimed as a basis of recovery by the plaintiff, is a valid and binding contract upon the defendant. The plaintiff, seeking reversal of the judgment, and the rendering of a judgment awarding to it damages in accordance with the findings of the trial court, above quoted, has appealed to this court.

There seems to us to be no room for serious controversy as to what we deem to be the controlling facts of the case, in so far as the validity of the contract in question is concerned. The involved nature of this problem, however, renders it necessary that we make a somewhat extended and comprehensive statement of facts. Appellant has been a corporation of this state ever since long prior to entering into the contract in question, and from about the year 1907 up until the time of the commencement of this action in November, 1919, has owned and operated a large shingle manufacturing plant, manufacturing shingles therein, and marketing them therefrom upon a somewhat extensive scale. Its plant has at all times been located near the city of Montesano in Grays Harbor county. Up to a short time following the entering into of the contract, the power and heat necessary to operate appellant's mill machinery and dry kilns were supplied by its own auxiliary steam plant constituting a part of its general plant.

Respondent has been a corporation of this state ever since the year 1912. Speaking generally, it may be said to be a public service corporation, in that its articles of incorporation indicate that to be its principal business, and in that its principal business since some years prior to entering into the contract here in question seems to have been the furnishing of electric light to the city of Montesano and its inhabitants in pursuance of a franchise granted by that city. It seems that respondent may have then furnished power, other than for light, to industrial and and other plants in the city, though the record does not show to what extent such power had been so furnished. The record is silent as to respondent ever furnishing power to any person or corporation outside the city, other than to appellant and two other concerns; one being a machine shop, and the other being a certain gravel plant. The record does not inform us just how or where respondent acquired its electric energy which it furnished to the city and its inhabitants up to the time of entering into the contract, though up to that time and since then respondent seems to have been possessed of a generating electric plant some miles distant from the city. About January, 1915, respondent's representative approached appellant's representative with a view of entering into negotiations looking to the electrification of appellant's plant and the construction by respondent, upon ground to be furnished by appellant, of a steam generating electric plant, to the end that such steam electric plant, to be operated by respondent, should be furnished with fuel from appellant's mill, and electric power be furnished from such steam electric plant for the running of appellant's mill and steam heat to operate its dry kilns; it being contemplated that respondent would thereby be enabled to produce electric power from such plant in excess of that which would be necessary to operate appellant's mill and dry kilns, to the end that such additional power might be disposed of by respondent at a profit.

The foregoing, we think, is a fair statement in substance of the respective conditions we find these parties in when they entered into the contract on February 3, 1915. To the end that we have clearly before us the controlling purpose of that contract and just what each of the parties agreed to do, we quote therefrom, so far as we deem necessary for our present inquiry, as follows:

'This contract by and between Sunset Shingle Company, of Montesano, Washington, the first party, and Northwest Electric & Water Works, of the same place, the second party witnesseth:

'The general object of this contract is to provide for the electrification of the first party's shingle mill in Montesano, and operation by electricity generated and furnished by the second party, and the construction and operation of a steam electric plant at Montesano by the second party on land to be acquired by it from the first party near the said shingle mill; and all the details hereof are to be construed in the light of that general object.

'The first party, in consideration of the undertakings of the second party herein, agrees that it will, as hereinafter provided, sell, convey and transfer to the second party the following: '[Here follows specification in detail of the property, consisting of one-half acre of land near appellant's plant, and the machinery and equipment of appellant's steam plant.]

'All of the foregoing land and chattels are estimated by the parties at the value of thirty-five hundred dollars. * * *

'In consideration of the foregoing, the second party agrees that:

'The second party will, with all convenient speed, construct upon said parcel of land a modern steel electric power house and plant of a total capacity of six hundred (600) horse power, which plant shall consist of:

'[Here follow specifications.]

'The second party will also simultaneously with the construction of the said plant, or immediately after the same is finished, deliver and transfer to the first party, and install in its mill, the following electrical apparatus for operating its mill:

'[Here follows specification of electrical apparatus so to be furnished and installed.]

'The second party will furnish from its electric plant to said mill all electric current needed for operation of said mill, including lights, and whether said mill shall be operated eight hours, or more, per day, not to exceed nineteen (19) hours per day, that is, omitting the five hours from six p. m. to eleven p. m., unless the parties

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