The Consolidated Coal And Lime Co. v. Mercer

• Decision Date: 15 October 1896
• Docket Number: 1,921
• Citation: 44 N.E. 1005,16 Ind.App. 504
• Parties: THE CONSOLIDATED COAL AND LIME COMPANY v. MERCER
• Court: Indiana Appellate Court

44 N.E. 1005

16 Ind.App. 504

THE CONSOLIDATED COAL AND LIME COMPANY v. MERCER

No. 1,921

Court of Appeals of Indiana

October 15, 1896

Rehearing denied December 30, 1896.

From the Marion Superior Court.

Reversed.

James E. McCullough and Henry N. Spaan, for appellant.

John S Duncan, Charles W. Smith and Henry H. Hornbrook, for appellee.

OPINION

GAVIN, J.

Appellee recovered damages for appellant's failure to furnish the brick called for in the following contract:

"INDIANAPOLIS, IND., March 3, 1893.

MR. WM. R. MERCER:

Dear Sir: We hereby agree to furnish you 1,200,000 brick for your sewer on East street at seven dollars and fifty cents ($ 7.50) per M. delivered on the street along the line of your work as directed. The brick to be from 2 3-8 to 2 1-2 inches thick, and 8 to 8 1-2 long, and acceptable to the city engineer. Delivery to commence about April 1st, at the rate of no less than 300,000 brick per month. Settlement to be made the 3d day of each month for all brick delivered the month previous. Respectfully,

CONSOLIDATED COAL AND LIME COMPANY,

AUG. M. KUHN."

"I accept the above proposition. W. R. MERCER."

The court gave the jury the following instruction:

"The written contract must be construed in the light of the circumstances surrounding the transaction as known to both parties. If you shall believe from the evidence in the cause that at the time the written contract was entered into, if you shall find it was entered into, the defendant knew that the plaintiff had entered into a contract with the city for the construction of a sewer; that the said brick was contracted to be furnished by the defendant for the construction of the sewer; that by the terms of the contract the plaintiff was required to complete said sewer by the 1st of August, and this fact was then known to the defendant, then I instruct you that by the proper construction of such contract between plaintiff and defendant it was the duty of the defendant to furnish the whole of said 300,000 brick, so to be delivered, each month, early enough in the month to enable the plaintiff, by the exercise of reasonable diligence, to lay the same in the sewer within such month."

The correctness of this construction of the contract is the question presented for our determination.

It will be noted that the only extraneous facts and circumstances by the light of which we are, according to this instruction, to construe the contract, are that the contract for the sewer called for its completion by August 1st, and that this was known to appellant.

Counsel upon both sides lay no stress upon the words of the contract "as he may direct," presumably confining them to the place of delivery. We shall, therefore, so regard them here.

It is conceded by the learned counsel for appellee that if this were a contract for a general sale and delivery the appellant would have been entitled to the entire month for the delivery of each 300,000 brick, but it is insisted that because these brick were to be furnished for use in this special sewer which was to be completed by August 1st, therefore, the parties must be deemed to have intended a delivery of the last 300,000 in time for them to have been laid prior to that date, and that since the contract prescribes no different rule for the other months, therefore, the same intention must be held to be indicated as to them.

Counsel further concede that they may not, by parol, vary the terms of the written agreement, but they claim that "the words may not appear to have any ambiguity whatever in their meaning on the face of the contract, and yet when applied to the facts of the particular case may have a very different meaning from their natural import." They say: "It is not our attempt to introduce new words into the contract; only to discover what was the intention of the parties in using the language which they did use."

Much stress is laid upon the case of Bradley v. Steam-Packet Co., 13 Peters 89, where under a contract to hire the boat, Franklin, "until the Sydney is completed," the defendants were permitted to show that they were mail contractors engaged in carrying the mails, using the river so long as the absence of ice would permit, and transporting the mails by land when navigation closed, and that they were then building the Sydney for use in such business; all of which facts were known to plaintiffs. This evidence was held receivable to show that the contract was terminable when navigation on the river closed, although the Sydney was not yet completed. The recognized legal principle upon which the decision is based is that extrinsic evidence is admissible to enable the court to apply the contract to the subject-matter; the court saying, however, that the "subject-matter" extends beyond the mere designation of the thing or corpus upon which the contract operated and includes the circumstances which accompany the transaction.

This application of the principle by which extrinsic evidence is receivable to determine and identify the subject-matter of the contract is an extreme one, although the basic principle itself is thoroughly established, and three of the justices, including Judge Story, dissented from such application.

In the later cases to which our attention has been called, wherein the case is cited, it has been to sustain the general proposition that the surrounding circumstances are admissible to ascertain the subject-matter. Sorensen v. Keyser, 2 C. C. A. 92, 51 F. 30; U. S. v. Peck, 102 U.S. 64, 26 L.Ed. 46.

While some of our own decisions, as well as outside authorities seem to hold that evidence of the situation of the parties and surrounding circumstances is always admissible to aid in ascertaining the true meaning of a contract, later cases in our Supreme Court declare the law to be that "if the words of the instrument are clear in themselves it must be construed accordingly," and seem to limit the right to introduce evidence of extraneous facts and...