Hudson River Water Power Co. v. Glens Falls Portland Cement Co.

Majority

p. 548

Hudson River Water Power Company, Appellant, v. Glens Falls Portland Cement Company, Respondent, Impleaded with Glens Falls Gas and Electric Light Company, Appellant.

Headnote

Contract to supply electricity — when assignable — when not enforcible by parties not prepared to receive the electricity, nor by the company not prepa/red to deliver it — money paid thereunder recoverable.

An electric water power company, prior to constructing its power plant, entered into a contract with a cement company by which it agreed to supply the latter with a specified quantity oí electricity during the term of five years, such term to commence not earlier than the power company should be able to deliver the power. The contract contained, among other provisions, an agree- ‘ ment on the part of the cement company that the motors, arc lamps and transformers used by it should be guaranteed by the manufacturers thereof fo have respectively a power factor and efficiency as high as any obtainable in the market.

Subsequently the power company notified the cement company of its readiness to deliver the electric power, and the latter notified the power company of its

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readiness to accept such power and requested that the delivery he commenced the next day, to wit, October 1, 1902.

November 15, 1902, the cement company assigned its contract, together with all its rights and privileges thereunder, to an electric light company, and the latter accepted such assignment and agreed to perform the contract in all respects on the part of the cement company.

On November 20, 1902, and on December 20, 1902, the electric light company 1 paid the power company the monthly installments due under the contract under the mistaken 'assumption that the five-year, term of the contract had commenced on October 1, 1902. Such payments were accepted and retained by the power company with knowledge of the assignment to the electric light company and 6f its assumption of the contract.

December 22, 1902, the power company notified the cement company and the electric light company that it claimed that the contract was not assignable to the electric light company. Thereafter the electric light company repeatedly requested the power company to deliver power under the contract, but the latter refused to comply with these requests.

The electric light company refused to make a payment to the power company under the contract on January 20, 1903, and the power company then brought an action against both the electric light company and the cement company asking that it be adj udged that the cement company had violated and refused to perform the contract; that the assignment of it to the electric light company was void, or if valid did not entitle the electric light company to any right to demand electrical energy for use in its business of lighting; that 1 the cement company was still under obligations to take and pay for the energy in accordance with the contract; that plaintiff was under no obligations to deliver energy to either defendant, and also for damages against both defendants.

The cement company answered denying any breach of the contract and demanded the dismissal of the complaint.

The answer of the electric light company demanded specific performance of the contract between the plaintiff and the cement company, and set up a counterclaim for damages and also for the recovery of the moneys paid under the contract, if it should be determined that the term of the contract had not yet commenced.

Upon the trial of the action it appeared that the power company had never placed itself in a position enabling it to supply power under the contract; that the cement company was not able to take the electrical energy under the terms thereof, and also that the electric light company, instead of obtaining the guaranty required by the contract to the effect that the motors, arc lamps and transformers which it intended to use had a power factor and efficiency as high as any obtainable in the market, had simply obtained a guaranty from the manufacturers of the apparatus that it was “of our highest standard manufacture, both mechanically and electrically.”

Meld, that the contract in question was assignable by the cement company to the electric light company;

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That the electric light compatiy, not having installed and not having procured the guaranty of its apparatus as required by the contract, was not in a position to demand specific performance thereof;

That the plaintiff power company, never having been able to supply power regularly under the contract; was not entitled to claim a breach thereof on tlie part of the electric light company of the cement company nor to retain the two monthly installments paid to it by the electric light company;

That such payments having been made by the electric light company under'a mistake of fact as to the time when’the term of the contract commenced, it was entitled to recover them;

That, consequently, a judgment to the effect that the plaintiff had no cause of action against either of the defendants; that the electric light company had no right, of action against the plaintiff for specific performance of the contract or for damages for a breach thereof, and that the electric light company was entitled to recover from the plaintiff the two installments paid under t'he contract with interest, secured, to the parties all the relief to which they were respectively entitled and should be affirmed.

Appeal by the plaintiff, the Hudson River Water Power Company, and by the defendant, the Glens Falls Gas and Electric Light Company, from a judgment of the Supreme Court, entered in the office of the clerk of the county of Saratoga on the 22d day of March, 1905, upon the decision of the court, rendered after a tidal at the Saratoga Special' Term, dismissing the complaint upon the merits, and awarding damages to the defendant Glens Falls Gas and Electric Light Company against the plaintiff, but adjudging that siiid defendant have no further relief against plaintiff.

The action is one arising n-nder a certain contract made between the plaintiff power company and the defendant cement company, bearing date the 7th day of February, 1901. At the time' of the making of such contract the plaintiff was proposing to construct a dam and power house at Spier Falls for the purpose of the development, transmission and sale .of electricity and electrical energy. The contract in question provided that the power company will “ keep available for use and supply to and for the Cement Company, on the premises of the Cement Company in the town of Queensbury and State of New York, for the term of five years, electrical energy to the amount of seven hundred thirty-one and twenty-five hundredths (731.25) kilowatts, and such additional amount not exceeding 73Í.25 kilowatts (making 746.2.50 kilowatts in all), as may be desired from time to time by the Cement

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Company. *• * * The term of five years, during which electrical energy is to be supplied by the Power Company, and paid for by the Cement Company as provided in this agreement, shall commence at the expiration of three months after the Power Company shall be able to deliver electrical power to its substation in regular service; provided, however, that the Cement Company may at its option, by written notice to the Power Company, elect to have said term of five years commence at any earlier time within three months after the Power Company shall be ready to deliver electrical' energy as herein provided. * * * The Cement Company agrees to pay to the Power Company for the said term of five years for the right to use the first seven hundred thirty-one and twenty-five hundredths (731.25) kilowatts of electrical energy, the sum of twenty-two thousand five hundred dollars ($22,500) per annum in equal monthly installments of one thousand eight hundred and seventy-five dollars ($1,875) each, on the twentieth day of each month in each year during said term of five years.” The contract also contains provisions by which the cement company agreed to pay the power company at the times and at the price specified therein for all electrical energy demanded by the cement company in excess of the first 731.25 kilowatts whether the energy be used or not. The contract also contains the following provision: “ The Cement Company further agrees that it will not use, in connection with the energy supplied by the Power Company, any apparatus except such as shall be of standard make, and have been purchased by it from some reputable manufacturer. All such motors and arc lamps shall be guaranteed by such manufacturer to have a power factor as high as any obtainable in the market, and all such transformers shall be guaranteed to have an efficiency as high as any obtainable in the market. At or before the time of installing any apparatus the Power Company shall have opportunity to test the same for the purpose of ascertaining that its power factor or efficiency is equal to that guaranteed, and any apparatus which shall be defective in this respect shall be rejected.”

On the 29th day of September, 1902, the plaintiff served notice upon the defendant cement company that it was able to deliver electrical power to its substation in regular service under and in performance of the provisions of the aforesaid contract, and also able to

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deliver energy- to said defendant as provided for in said contract,, and that it would commence such delivery to the defendant cement-company at the expiration of three months from that date, to wit, January 1, 1903, unless the- defendant cement company exercised its. option under the contract to have said delivery commence at an earlier date.

On the 30th day of September, 1902, the defendant cement company, in response to the. foregoing notice^ received by it on the pre- . ceding day, served notice upon the plaintiff that it elected under the. terms of the contract to have delivery of the electrical energy by the? plaintiff commence on the 1st day of October, 1902, at. ten o’clock. A. m., and waived its right , to postpone such delivery until January 1,1903.

On the' 15th day of November, 1902, the defendant cement company, by an instrument in writing, assigned the contract to the defendant light company, together with all its rights and privileges, thereunder,, and the. light company accepted such assignment and agreed to perform the same, in all respects on the part of. the said cement company.

On the 20th, ;day of November, 1902, the defendant light company , notified the plaintiff-of such assignment and paid to the plaintiff the sum' of $1,875 on, the. assumption that the five-year term under the, contract had commenced on October 1, 1902, and on the 20th day of December,. 1902, it also paid the plaintiff the further sum of $1,8-75 upon a like assumption, both being for monthly installments.payable under such contract, if such term had commenced, and the. plaintiff accepted and retained each of said payments. On December 22, 1902, the plaintiff notified the cement company and the light company that the plaintiff claimed the contract, was not assignable, to the . light .company. The light company thereafter - repeatedly-requested the plaintiff to deliver power under the contract and the plaintiff failed to do so. The light'company refused to make a payment to the plaintiff under the contract on January 20, 1903, and. this action followed.

In the complaint the plaintiff asked for judgment that the cement, company had violated and refused to perform the contract; that thé assignment of- it to the light company was void, or „if valid did not entitle the light. company to any right to demand electrical energy,

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for use in its business of lighting; that the cement company was still under obligations to take and pay for the energy in accordance with the contract; that plaintiff was under no obligations to deliver energy to either defendant, and also for damages against both . defendants.

The cement company answered denying any breach of the contract . and demanded the dismissal of the complaint.

The answer of the light company demanded specific performance of the contract between the plaintiff and .the cement company, and set up a counterclaim for damages and also' for the recovery of the moneys paid under the contract, if it should be. determined that the term of the contract had not yet commenced.

The trial court decided that the plaintiff had no cause of action against the defendants or either of them; that the agreement between the plaintiff and the cement company was terminated before the assignment of the contract by the defendant cement, company to the defendant light company; that the light company had no right of action against the plaintiff for specific performance ■ thereof or for damages for a breach thereof, and that the light company was entitled to recover from the plaintiff the two sums of $1,875 paid under the contract, with interest from the time of such payment, and costs.

. From the judgment entered thereon the plaintiff and the defendant light company have appealed.

Edgar T. Brackett, Richard Lockhart Hand and Henry W. Williams, for the plaintiff, appellant.

Howard Taylor, William B. Anderson and Francis H. Kinnicutt, for the appellant Glens Falls Gas and Electric Light Company.

' S. Brown c& L. M. Brown, for the respondent Glens Falls Portland Cement Company.

This court decided upon a former appeal that the counterclaim interposed by the light company stated a cause of action ( 90 App. Div. 513 ; affd., 178 N. Y. 611 ). This decision materially limits the scope of our present inquiry.

Upon the former appeal it is true this court did not deem it nec

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essary to determine the question whether the contract was assignáble or not yet in its opinion on that appeal it was said that, the plaintiff “ must' be held to have accepted the light company as the party entitled to the contract which it had executed originally with the cement company, unless there, be something in the nature of . the contract which renders impracticable its performance with this assignee,” and it was said that no provision of the contract was found “ which by fair interpretation cannot be adjusted to the use of any assignee of such power.” While the conclusion that the plaintiff had accepted the light company as the party entitled to the contract might have been .based upon the plaintiff’s waiver of the light to insist otherwise, yet enough was said in the former opinion to indicate clearly that the court then thought, without so deciding, 1 that the contract was assignable. For the reasons then given, which heed not be repeated, we have lio hesitation in now holding the contract to be assignable.

We are not satisfied that the trial court was correct in its conclusion that the contract was terminated or abrogated before its assignment to the defendant light company. It is entirely clear, from the correspondence between the parties, that each was trying to get the other in default under the contract, yet if both were in default that would not alone be sufficient, in the face of the -claim of each that, the contract was in full force as against the other, to justify the conclusion that it had been terminated. There had been no election on the part of either party to it or by the assignee to treat the contract as terminated by reason of the breach thereof by the other ; nor, with the exception of the failure of the plaintiff to furnish power to the light company on the ground of the alleged invalidity of its assignment, has there been any refusal to perform. The light company is not here insisting upon this breach to relieve it from further performance, but is insisting that notwithstanding this refusal the plaintiff be compelled to perform. The plaintiff has all along insisted that the contract was in full force as against the cement company and that it could compel the cement company to take and pay for electrical energy under the contract. In its pleadings and Upon the trial the plaintiff insisted that at the time it gave its notice and ever since it had the necessary power and was ready to deliver it under the contract whenever the cement company- had installed

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the proper apparatus as required by the contract for receiving it. Each of the defendants too have always insisted that the contract was in full force. That being so, it is entirely clear that there has never been any agreement between the parties to terminate it. The parties have concurred in one thing at least and that is in each trying to hold the other to a full performance ■ of the contract. The attitude of the plaintiff in this respect continued long after the assignment of the contract to the light company, for the plaintiff received and retained two payments of monthly installments from the light company after the assignment had been made and after the plaintiff had full knowledge not only of the assignment, but that ■ the light company, by taking the assignment had, under the terms thereof, made itself liable to perform the same in all respects. ■ Under such circumstances there is nothing upon which to base the conclusion that the contract was terminated or abrogated prior to the assignment.

But even if the contract has not been terminated and has been assigned to the defendant light company, these facts do not in our opinion affect the correctness of the judgment appealed from, for neither party has shown itself entitled in this action to any further or different relief than has been there given.

■ The trial court found that neither on the 29th day of September, 1902, nor at any other time while said contract was in force, was the plaintiff able to deliver electrical power at its sub-station in regular service or deliver power to the cement company as provided and contemplated in and by said contract, and it also found that on the 30th day of September, 1902, the defendant cement company was not and has not since been able to take or receive the electrical energy from the plaintiff under ánd in accordance with the terms and conditions of said contract. The evidence in. support of these findings is referred to in the opinion of the learned trial justice, and we need not detail it here. It is enough for us to say that after carefully examining all evidence on the subject we regard it not only as sufficient to support but as necessitating such findings. Under the first of these findings the complaint was properly dismissed for the reason that the plaintiff had no cause of action against the defendants at the time it commenced its action. (Sherman v. Foster, 158 N. Y. 587 .)

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The plaintiff was clearly not required to furnish electrical energy to the water rheostat installed by the cement company, for the contract provided that such energy should be furnished instead to transformers at the pressure specified therein.

The defendant light company claims that it has installed on the premises of the cement company motors and transformers in accordance with and guaranteed as required by the contract. This is disputed by the plaintiff and the trial court has not found that such apparatus and transformers .have been so installed and guaranteed.

The contract required that the niotors. and transformers to be. used in connection with the energy supplied should b.é guaranteed by the manufacturers, the motors to have a “ power factor ” and the transformers to have an “ efficiency as high as any obtainable, in the market.”

In the contract under which the defendant light company purchased the motors and transformers which it claims meet the requirements of the contract, the' manufacturers agree that the “ apparatus named in this, contract is guaranteed to. be of our highest standard manufacture, both mechanically and electrically.”

It cannot be successfully contended that this guaranty comes, anything near the requirement. The mere inspection of the con- ' tract containing the requirement, and the one containing the guaranty, and comparing the one with the other, shows clearly that there has been a complete failure in this respect.

Manifestly until the apparatus fpr receiving eleeirical energy has been installed on the premises of the defendant cement company, as provided for by the contract, and has been guaranteed by the manufacturers thereof, as required by such contract, the defendant light company is in no position to demand specific performance, of the contract to deliver electrical energy. This appears clear notwithstanding the provision of the contract requiring the power company to “ keep available for use” the specified amount of electrical energy and the covenant therein on-the part of the cement company to pay for the “ right to use ” the power so kept available.

The plaintiff having been unable to supply power in regular service at the time-it gave the notice to the cement company that it was able so to do, it follows that the five-year period mentioned in the contract never commenced to run, and, therefore, that the

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light company was under no obligation to make the two payments to the plaintiff of monthly installments under the contract which it did on the false assumption that such period had commenced. These payments having been made under a mistake of fact were properly recovered by the defendant light company under its counterclaim against the plaintiff, hut we think such light company has not shown itself entitled to any further relief against the plaintiff in this action.

The judgment should be affirmed, with costs to the defendant cement company against the plaintiff and without costs to the other parties.

All concurred, except Parker, P. J., not voting.

Judgment affirmed, with costs to the defendant cement, company against the plaintiff and without costs to the other parties.

Cases cited

Hudson River Water Power Co. v. Glens Falls Gas & Electric Light Co. 178 N. Y. 611 N.Y. 1904-05-10 p. 553
Sherman v. Foster 158 N. Y. 587 N.Y. 1899-04-18 p. 555