Porto Rico v. Title Guaranty & Surety Co.

delivered the opinion of the court.

This is a suit upon, a joint and several bond executed by the defendant in error as surety for the Vandegrift Construction Company. In the Circuit Court a nonsuit was ordered and the order was affirmed by the Circuit Court of Appeals on the ground that the plaintiff by its own act had made performance of the condition impossible. 103 C. C. A. 607 ; 180 Fed. Rep. 64b. The facts are these:

By an ordinance of March 2, 1903, Porto Rico granted to the Vandegrift Company the right to build and operate an electric railway and also a power plant in specified places in the island. Within one year from acceptance of the grant the grantee was to have its roadbed completely graded between the Island of San Juan and the urban portion of the municipality of Caguas, and the foundations and approaches of a certain bridge completed. Section 15.. Within two years it was to have the parts of the railway lying between the urban portion of San Juan and Caguas and certain other points finished and ready for service. Section 16. Within three years it was to have the whole line completed and in operation. Section 17. It was stated to be expressly understood and agreed that upon the grantee’s failure to have the line in full operation within the time limited, i. e. three years, the grantee’s right to operate , any part of it or to sell electric light and power should cease unless the failure should be declared by the Executive Council to be due to one of certain excuses, such as the act of God. Section 16.

A power dam at Comerio Falls was to be completed in one year and the greater' part of the electric apparatus

Upon presentation of a certificate of completion from the Commissioner of the Interior, “and upon the full compliance with the terms of this ordinance to the satisfaction Of the Executive Council, and upon .the full payment by the grantee of any loss, damage and costs accruing against the People of Porto Rico as in said bond provided, the said bond shall be cancelled.” - Section 35. Finally the ordinance is to “take effect immediately upon the acceptance by the graiitee of the terms and conditions hereof as above provided.” Section 38.

In February, 1905, a further ordinance was passed, approved by the Governor in March and by the President on May 12, which recited a failure by the Company to comply with the terms of §§ 15 and 18, either in their original form or as amended, and therefore repealed and revoked the grant and declared all “sureties or obligations . . . given by thé said grantee as a guar-, anty . . . forfeited to the People of Porto Rico to all and whatsoever extent the same shall be liable under the law.” • In September, 1906} this suit was begun;

The main question is the scope of the condition of the bond. The plaintiff says that it was for the due performance of all the terms required by the ordinance, and, since the bond was a contract made in Porto Rico, as no doubt it was, at least as between these parties, that upon any breach of condition the whole penalty became due by the local law. Civil Code, §§ 1120, 1121. . The Circuit Court of Appeals on the other hand assumed that the bond was only for the result at the end of three years.

After some hesitation we have come to the conclusion that the court was right. It is true that the bond is to be read in connection -with the original ordinance and that the latter contained terms that were not complied with. But the ordinance only required a bond for the full completion of the work within three years and in accordance with the conditions therein contained and the plans. Section 34. In the ordinance the only condition properly so called, the only fact that warranted a revocation of the grant apart from the general power to repeal, was by § 16 a failure to have the whole railway in operation as required by § 17. There was no forfeiture for falling short of the requirements in §§ 15 and 16 as to the progress to be made in one and two years. The bond in like manner has for its principal condition the completion of the work within

There is a further provision for the principal performing, ‘within the said period of'three (3) years, all other terms and conditions in said ordinance required to be performed by the principal within the said period.’ This perhaps affords the plaintiff its strongest argument. But this is a residuary clause to cover matters that may have escaped consideration. The building of the road and works already have been dealt with, and this clause as to ‘other ’ terms hardly can be supposed to have reíerénce to them. If it does, however, it would seem to us that the limitation of time shbuld be construed as looking to the end of the three years and allowing that period, rather than distributively and as meaning from time to time during three years. The same considerations that apply to the construction of the principal condition apply to this, and it appears to us that the provision for the cancellation of the bond upon certificate showing the completion of the work, ‘and upon the full compliance with the terms of this ordinance to the satisfaction of the Executive Council’ is not enough to change what we understand to be the import of the instrument upon its .face. Finally the proviso that no extension of the time or times limited for

If our construction of the bond is right it does not need much argument to show that the plaintiff is not entitled to recover, seeing that within three years it took the franchise back. It was said at the bar, though not ad--mitted, that the principal had given up work. But there had been no repudiation of the contract, and the plaintiff could not accelerate the forfeiture simply on the ground that it was likely to come about. If, within the time allowed for.performance the plaintiff made performance impossible, it is' unimaginable that any civilized system of law would allow it to recover upon the bond for a failuré to perform. 2 Bl. Comm. 340, 341. United States v. Arredondo, 6 Pet. 691 , 745, 746.

Judgment affirmed.