Edgerton v. Taylor

"Walker, J'.,

after stating tbe case: This case was not tried in tbe court below upon the correct theory, and tbe issues submitted to tbe jury did not embrace fully all tbe matters really in controversy. These issues were objected to by tbe defendants and other issues tendered by them, which were rejected by tbe court, and defendants duly excepted.

Tbe court submitted, as will appear above, among others, the following issues to tbe jury:

“5. Did tbe plaintiff J. M. Edgerton wrongfully interfere with tbe auction sale of tbe property, as alleged in tbe answer ?”

Tbe court then charged tbe jury upon that issue as follows: “If tbe jury should find by tbe greater weight of tbe evidence that after tbe execution of tbe bond for $59,000, J. M. Edgerton, by word or act, said or did anything to stifle tbe sale or bid, tbe court charges you that the consideration of tbe bond would have failed, and it would be your duty to answer tbe fifth issue ‘Yes.’ ”

Tbe defendants complain that notwithstanding the instruction of tbe court upon tbe fifth issue, and tbe affirmative response of the jury thereto, tbe court has rendered judgment against tbe defendants for tbe full amount of tbe bond, viz.: $59,000, contrary to tbe instruction of tbe court that if tbe jury found that J. M. Edgerton “said or did anything to stifle the sale or bid, tbe consideration of the bond would have failed.” In other words, that, as tbe jury found, by the answer to tbe fifth issue that J. M. Edgerton bad stifled tbe sale or bid, tbe consideration of tbe bond for $59,000 bad failed, and it would follow therefrom that plaintiff could not recover on the bond, or, at least, could not recover as much as $59,000.

Then, again, tbe court refused to submit an issue as to tbe damages, if any, sustained by tbe defendants or tbe principals in the bond for $59,000, in consequence of tbe wrongful interference by J. M. Edgerton with tbe auction sale of tbe property. It does not follow that because tbe sale was not wholly prevented by tbe unlawful and wrongful interference of J. M. Edgerton with tbe same, that defendants, or some of them, were not damaged thereby, or that by reason of tbe wrongful conduct of J. M. Edgerton be may not be barred altogether of any remedy or right of action on tbe bond against those who executed the same, as sureties, or who guaranteed the payment of tbe debt to Edger-ton, upon condition, which was precedent, that be should not interfere with tbe sale. It is not in this condition of the guaranty or undertaking of some of tbe defendants as sureties that they will pay tbe debt or be responsible for any default of their principals, if Edgerton did not prevent tbe sale, but only if be did not interfere with it, and would agree, as a part of tbe condition, that all objections to it bad been removed; and, therefore, the sureties, or guarantors, are entitled to stand upon tbe exact terms of tbeir contract or undertaking, and if Edgerton failed to comply witb it strictly, to be discharged or exonerated from all liability. Some of tbe defendants, wbo claim to be merely sureties or guarantors, insist that, when the facts of the case are fully disclosed and shown, by the evidence and under proper issues to be submitted to the jury, it will appear that their true position is but that of guarantors or sureties who have assumed responsibility for the payment of the debt only upon a condition precedent which has not been literally or even substantially performed, but has been openly and essentially violated by Edgerton, and that by reason thereof, the latter has forfeited all right to proceed against them in the event of their principals’ default. They further contend that the only consideration for their agreement to answer for the wrong or default of their principals was the reciprocal promise of Edgerton that he would not interfere with the sale and withdraw all objections to it, and that this he failed to do. That he did interfere with the sale, as admitted by him, and found by the jury at the last trial; and further, that he, by doing so, and by other wrongful and illegal conduct, stifled competition and chilled the biddings, and caused great damage to the defendants, both the principals and the sureties, and thereby released the latter from all liability to him. It is expressly alleged that J. M. Edgerton announced at the sale, or caused to be proclaimed, that whoever bought the property would not get a good title. The auctioneer employed to sell the property talked with J. M. Edgerton, and requested him to bid on the property, but Edgerton replied to him that “there was no use bidding on the property, that we couldn’t give title.” One witness at the last trial, Thomas Burton, detailed his conversation with Edgerton at the sale, and testified as follows: “I saw Mr. J. M. Edgerton at the sale and asked who he was. I asked him to bid on the property, and he told me there was no use bidding on the property, that we couldn’t give title, and I made the remark to him that I .guessed we could, we didn’t usually sell property unless we knew what we were doing, and he said we couldn’t give title. He was standing -at the large entrance door, and there were quite a number present. I do not know that I can recall the names of any of them. Mr. Hardy was standing there, and the young man we had advertising for us. In consequence of the remark made by Mr. Edgerton, I turned and asked who he was, and they told me it was Mr. Edgerton, and I got back on the wagon and made the announcement that if any one in the audience was afraid of the title they could make their first cash payment and we would place the first payment in any bank in the city until they were satisfied that the title was good. I didn’t see any chance of selling the property when the owner was knocking the sale. When I spoke to Mr. Taylor, I was within ten feet of Mr. Edgerton. I spoke wide open so any one in tbe world could bear it, and it was after speaking to Mr. Taylor that I made tbe announcement from tbe wagon. Tbe' crowd began dwindling away, and we couldn’t bold them after making tbat announcement.” This witness further stated tbat in consequence of wbat bad occurred there was no sale, and tbat there were 1,000 or 1,500 people at tbe sale.

It is further alleged by tbe defendants tbat tbe conduct of tbe plaintiff J. M. Edgerton, as alleged, caused those intending to bid on said property to desist from executing their intention, and particularly two bidders, who bad made bona fide bids aggregating $65,000, to withdraw said bids, said withdrawals being caused wholly and solely by a statement of tbe plaintiff J. M. Edgerton tbat a lawsuit would arise out of any purchase by any bidder at said sale. Tbat in consequence of tbe wrongful conduct of tbe plaintiff J. M. Edgerton, as above alleged, tbe performance of tbe contract on tbe part of tbe defendants W. V. Taylor and A. E. Moye was made impossible, and tbe defendants are advised, informed, believe, and allege tbat such conduct was a breach of contract by tbe plaintiff. There was ample allegation and proof in tbe case of tbe suppression by J. M. Edgerton of biddings at tbe sale and of active and energetic efforts by him to discourage those present for tbe purpose of bidding for tbe property, and cause them to desist from said purpose by disparaging and flyblowing tbe title, which was offered to those desiring to purchase tbe property.

It would be difficult, if not undesirable, at tbis time and in tbe present situation of tbe case, with tbe issues not, in their nature, fully determinative, or decisive of tbe rights of tbe parties, and of tbe real questions involved, to state with any degree of precision tbe principles of law applicable to tbe case, as it may hereafter be developed, but tbe following may have important bearing when tbe case is correctly presented upon tbe true and essential issues, leaving their proper application to tbe different phases and aspects of tbe controversy as they may hereafter appear at tbe next trial. We therefore state them here:

If tbe contract is entire in tbe sense tbat each and all of its parts are interdependent, so tbat one part cannot be violated without violating tbe whole, a breach by one party of a material part will discharge tbe whole at tbe option of tbe other party. 6 E. O. L., Contracts, paragraphs 311 and 324, also 310. And again, as a general rule, it is settled tbat where one party is unable to perform bis part of tbe contract be cannot be entitled to tbe performance of tbe contract by tbe other party. Moreover, a party positively refusing to perform bis contract cannot sue tbe other for nonperformance, where tbe promises are interdependent, or if one is the consideration for the other, and the contract is wholly executory. 6 E. C. L., Contracts, paragraph 324.

Where tbe performance of an agreement depends upon an act to be done by plaintiff, tbe doing of sucb act is a condition precedent, and tbe Court will not (always nor generally) inquire wbetber tbe doing of it is beneficial to defendant. So, whenever tbe entire consideration of tbe demand claimed is stipulated to be performed at or previous to tbe performance of tbe demand, tbe performance of tbe consideration becomes a condition precedent. 13 C. J., Contracts, paragraph 698.

Tbe general rule is that promises, each of which forms tbe whole consideration for tbe other, will not be held to be independent of one another; and a failure of one party to perform on bis part will exonerate tbe other from liability to perform. Clark on Contracts, 656; 13 C. J., Contracts, paragraph 540. Likewise, tbe party from whom tbe performance is due cannot (generally) assert that performance would be of no benefit to tbe other party. 13 C. J., Contracts, paragraph 706; also 13 C. J., Contracts, paragraph 735.

Tbe decisions of our State seem to be in accord with these principles. Niblett v. Herring, 49 N. C., 262; Wooten v. Walters, 110 N. C., 254. One party to a contract cannot maintain an action for its breach without averring and proving a performance of bis own antecedent obligations arising on tbe contract, or some legal excuse for a nonperformance thereof, or, if tbe stipulations are concurrent, bis readiness and ability to perform them. Ducker v. Cochrane, 92 N. C., 597, cited and approved in McCurry v. Purgason, 170 N. C., 468; Tussey v. Owen, 139 N. C., 457.

This Court said, by Hoke, J., in McCracken v. R. R., 168 N. C., 62, at p. 67: “It is true that our Court has frequently expressed its approval of tbe principle that, in ordinary business contracts, in which tbe consideration has wholly or in part passed, conditions subsequent which look to tbe forfeiture of rights and covenants for liquidated damages, which are in their effect but penalties, will be construed with some strictness, and, in tbe exercise of its equitable powers, that it will, at times, relieve against forfeiture in tbe one case and will adjust tbe conflicting interests in disregard of tbe penalty in tbe other. But tbe principle does not obtain in tbe case of conditions precedent where strict performance may be insisted on,” citing Corinthian Lodge v. Smith, 147 N. C., 244; 1 Pomeroy Eq. Jurisdiction (3 ed.), sec. 455. And in illustration of the principle controlling with reference to a condition precedent, tbe Court further said in that case: “Where tbe condition requires tbe railroad to be begun or finished before a certain date, it is held that time is of tbe essence of the contract, and tbe subscriber may be discharged from liability by a failure to comply with tbe condition.” 1 Elliott R. R., secs. 116-117. Where a town agreed to issue its bonds on “performance of certain conditions by a railroad company — as that it should construct its road from a certain point to a certain other point within a given time — if the company does not perform the condition within the time, it cannot, though prevented by floods, compel the issue of the bonds, though it afterwards completes the line. 1 Wood R. R., sec. 119, citing R. R. v. Thompson, 24 Kan., 170. A subscription, 'providing that the town of F. be made a point, and said road be put under contract in one year from 1 September, 1853’: Held, putting the road under contract was a condition .precedent to the right of the company to recover, though the road was finished and running by 1 September, 1858; Judge Dillon saying, the letting to contract as stipulated might have hastened completion. R. R. v. Boestler, 15 Iowa, 555. In the present contract the parties have not only'made the express stipulation that if the road is not completed to a certain point in three years, the bonds will be surrendered and destroyed, and that all rights and equities under the contract shall cease, but have added yet another with regard to time, that the bonds shall not be delivered unless and until the railroad shall construct its lines as above set forth, and has in operation over said line, within three years, trains for the transportation of passengers and freight.” And in Ducker v. Cochrane, 92 N. C., 597, cited with emphatic approval in Corinthian Lodge v. Smith, supra, the Court held: “That one party to a contract cannot maintain an action for its breach without averring and proving a performance of his own antecedent obligations arising on the contract, or some legal excuse for a nonperformance thereof, or, if the stipulations are concurrent, his readiness and ability to perform them.” And the Court in that case further says: “This principle has been recognized and applied by us in many well considered cases. Tussey v. Owen, 139 N. C., 457; Jones v. Mial, 79 N. C., 164, modified, but not on this point, in 82 N. C., 252; Niblett v. Herring, 49 N. C., 262; Grandy v. McCleese, 47 N. C., 142. And it is also well established that when the stipulations imposed by such a contract on the complaining party are in the nature of conditions precedent, a strict compliance may be insisted on. Mizell v. Burnett, 49 N. C., 249; Norrington v. Wright, 115 U. S., 188; Oakley v. Morton, 11 N. Y., 25; Pickering v. Greenwood, 114 Mass., 479.”

And more especially as bearing upon the particular questions in this case, attention is directed to the fact that the bond in question is a surety bond, the nature or character of which is explained in 20 E. C. L., at p. 946, under the title “Principal and Surety,” paragraphs 2 and 3. Since from an early date the liability of a surety has been considered as strictissimi juris, it is a general rule, where the surety enters into the contract of suretyship upon condition and in consideration of something to be first done by the creditor, that if the latter omits to perform the condition the surety is not liable. 21 E. 0. L., 962, “Principal and Surety/’ paragraph 16; Lawrence v. Walmsley, 104 R. C. L., 799; see note, 22 Ann. Gas., 415. Sureties are favored by the law. Tbeir obligations are ordinarily assumed without pecuniary compensation, and are not to be extended by implication or construction. They have a right, as we have said, to stand on the terms of their contract, and having consented to be bound to a certain extent only, their liability must be found within the terms of that consent, strictly construed, and it has been said to be insufficient that the surety may sustain no injury by a change in the contract, or that it may even be for his benefit. 21 R. C. L., 975, “Principal and Surety,” paragraph 28, and see especially note 11, p. 976.

In Jeffries v. Lamb, 73 Ind., 202, a creditor whose indebtedness was secured by a chattel mortgage took from his debtor a note signed by a surety. The creditor at the time promised the surety to cancel the chattel mortgage so as to enable the surety to secure a mortgage on the chattel from the debtor as security to him. The creditor failing to do this, it was held that the surety was not liable, the Court saying: “These facts show, we think, an entire failure of the consideration of the note in suit as between the appellant as payee of the note and the sureties therein.”

In Fay v. Jenks, 93 Mich., the Court held that “If the creditor violated the agreement for the exclusive agency as per contract, the sureties were not liable, irrespective of the extent to which the agreement was violated and the resulting injury to the corporation.” The court pointed out in that case that the defense was not on the ground of a partial failure of consideration, but upon the ground that the creditor violated the condition upon which the surety signed, and which was the sole consideration of his suretyship.

In Jones v. Kerr, 30 Ga., the Court said: “We understand the law to be this: If a creditor neglects to perform, or performs defectively, any of the conditions either expressed or implied which are incumbent upon him, or any of the terms which, collectively, form the consideration of the surety’s contract or the contract to which the surety acceded, the surety is discharged, or rather, his liability never attached.”

In Capps v. Smith, 4 Ill., 177, the Court said: “The rule is well settled that where the undertakings of the parties to a contract are mutual, one in consideration of the other, they are to be regarded as dependent contracts, which neither party can enforce without averring and proving a performance.” Coughran v. Bigelow, 164 U. S., at p. 301, and especially on p. 310. See, also, Gamble v. Cuneo, 47 N. Y. Suppl., at p. 548, where the Court said: “The rule that a contract of a surety is strictissimi juris is not a rule of construction, but a rule as to the application of the contract after its meaning has been ascertained.” See, further, Day v. Dox, 24 Amer. Dec., 137; Gayton v. Dey, 178 Fed., 249 (101 C. C. A., 609); Hurd v. Livermore, 5 Pick. (Mass.), 101; Chapman v. Clements, 56 Southwestern, 646 (last paragraph of opinion); Gardner v. Edwards, 119 N. C., 566.

It is well understood in the law that parties must be permitted to make their own contracts in their own way, and they will be valid and binding upon them except where not contrary to good morals, or for some other reason, deemed sufficient, they are not sanctioned by the law, or are declared invalid and unenforceable in the interest of public policy.

The plaintiff has made á contract, in this instance, that he would refrain from doing anything that would interfere with the making of this sale, or obstruct the same, and has agreed that he would withdraw all objections to it, and the defendants, some of whom are sureties, or guarantors, for the performance of their part of the contract, have agreed, in consideration of plaintiff’s promise, as set forth, and upon condition that he fully and faithfully performs the same, that they will become bound to him for the faithful performance of their part of the contract. But it appears that the promise of the one was the only consideration for the promise of the other, or to state it differently, the promise of J. M. Edgerton, and the fulfillment of it, was necessarily a condition precedent to any obligation on the part of the defendants, or, at least, such of them as were to be sureties or guarantors, that they should become bound to Edgerton in the manner specified in the contract. But we are of the opinion that the case was not so tried throughout as to decide the dominant question in it, nor yet to determine it with respect to other important matters involved in the controversy, one of these questions being the amount of damages to which the defendants, or any of them, are entitled to recover if plaintiffs have violated the contract on their part, and the actual prevention of the sale by the plaintiffs is not essential to their recovery of such damages, because if plaintiffs have impaired the right of the defendants to have a sale free from objection, and, of course, without interference by them and free from any act or conduct of theirs which was calculated to impede the sale by depressing or chilling the biddings, by disparaging the title to the property, or by other means or conduct, and to the extent that defendants’ rights were impaired in such manner, it would seem that.they are entitled to be compensated for any loss they sustained.

It may be that it would conduce to a more intelligent and a clearer perception of the controlling or determinative issues if the parties should replead and state their respective sides of the controversy more precisely, under the order of the Court, and that thereupon other issues be framed and submitted to the jury, but the case can proceed without this being done, if the parties are so advised, what we have said in this regard being merely suggestive, and not as any compulsory direction by us, but as something left entirely to tbe discretion of counsel, and to be done with tbe approval of tbe presiding judge.

We order a new trial as to all tbe issues, as tbis will best attain tbe end in view, and will tbe more certainly conserve, if not advance, tbe rights and interests of tbe several parties.

We need not consider tbe other exceptions, though tbis does not mean that they are not well taken, but that it would not be timely to refer to them more minutely than we have already done, as we deem it best to reserve all other questions until tbe facts are more fully and clearly presented to us than they are in tbis record.

There must be another trial for tbe purposes we have indicated, and it will be so certified.

New trial.