Lynn v. Baltimore & Ohio Railroad

Millek, J., delivered the opinion of the Court. This action was brought by the appellant against the appellee, to recover damages for breach of a written agreement by which the plaintiff engaged to furnish a certain quantity of ice to the defendant for the use of its road generally, and for its hotel in Cumberland. The contract is embodied in a letter from N. S. Hill, the general purchasing agent of the company, to the plaintiff, dated the 7th of December, 1880, which contains this provision: “The ice to be good, clear, solid stock, not less than six inches thick, clear of snow, and subject to the inspection and approval of an agent of the company selected by me.” In pursuance of this contract, Hill appointed J. E. Legge, the station agent of the company in Cumberland, to inspect and approve the ice, and the plaintiff, at sundry times after the ice season commenced, sent specimens of the ice he proposed to furnish, to Legge, who rejected the same, and no ice was ever, in fact, delivered. In his amended declaration, the plaintiff, after setting out the contract avers that, relying upon the same, he made all necessary arrangements for full and complete performance thereof, in the way of leasing land to work upon, and purchasing tools, which involved the expenditure of a large sum of money, and that at the first favorable ice season, which was sometime in December, and from time to time thereafter, he requested the defendant to allow him to proceed to furnish and deliver the ice as he had contracted to do, and submitted samples of the ice to be inspected by the agent appointed by Hill, but said agent fraudulently rejected the same; that he was willing and ready, and offered to perform his said contract in each and every par ⁴¹⁰ ticular, and was fully prepared and able so to do, but the defendant wholly neglected and refused to allow him to perform the same, or to accept the ice it had agreed to accept, and which the plaintiff had agreed and was willing and ready to deliver as he had contracted to do.

It appears that besides the general issue, the defendant filed a number of special pleas to the original declaration, and that to several of these demurrers were interposed, some of which were sustained, and that the pleas thus overruled were allowed to be amended, but it does not appear that any amended pleas were ever filed. It also appears that demurrers were sustained to several replications to the original pleas, but as no amended pleas were filed, the rulings upon none of these demurrers are presented for review. In fact the record, upon this point, is very confused, and as counsel are unable or unwilling, to enter into an agreement setting forth what ought to be its true state, in this respect, we must take it as it stands, and, in the absence of the amended pleas, we assume (as counsel for the appellee have stated) that after the amended declaration was filed, charging that Legge fraudulently rejected the ice, there were no demurrers, and consequently no rulings upon them. The apparent inconsistency therefore between the ruling sustaining the demurrer to the replication to the second plea, (the effect of which was to decide that the fact that Legge did not, in good faith, inspect the ice, but fraudulently rejected the same, would not entitle the plaintiff to recover,) and the instructions given by the Court to the jury upon the same subject, in the only exception taken at the trial, does not in fact exist, and therefore affords no ground for reversing the judgment rendered upon the verdict in favor of the defendant.

It is manifest the case was tried upon the assumption that fraud upon the part of Legge in rejecting the ice offered by the plaintiff, if found by the jury,' would enable him to recover in the action. But before ⁴¹¹ considering whether there is any error in the instructions to the jury upon this subject, we propose to state the general principles of law, which, in our opinion, govern the case. Inspection and approval by the agent appointed for that purpose, is, in this contract, a condition precedent. This is so plainly apparent from the face of the contract itself, that no authorities to sustain the position need be cited.

If, therefore, ice had been actually furnished and delivered, it would have been incumbent upon the plaintiff to prove that it had been thus inspected and approved, or to show some legal excuse therefor, before he could recover the stipulated price. So, if he seeks to recover damages for a breach of the contract, and founds his right upon the fact of a refusal by the agent to approve, he must show that the contract was, in lato, broken by such refusal; in other words, that compliance by him with this condition had been unlawfully prevented. There are several modes in which the performance of a condition precedent may be dispensed with which the case does not require us to notice. If Legge’s refusal to approve was brought about at the instigation, or by the procurement, of the defendant company, this would undoubtedly have dispensed with the condition and allowed a recovery; but it is conceded no such state of facts exists, and the plaintiff’s counsel admit they can furnish no proof that this refusal was procured by the company through any action of its directors, or by any order or direction of any of its superior officers, or that there was any collusion between them and Legge to have the contract broken up and the plaintiff deprived of its benefit.

It is averred, however, lhat Legge fraudulently rejected the ice submitted to him for inspection, and it is insisted that such fraudulent conduct on his part alone renders the company liable. This proposition was, to some extent, the subject of controversy in argument, and a large number of cases, having a bearing more or ⁴¹² less direct upon the question, have been cited by counsel on either side. We do not propose to review these authorities at length, and shall refer to but very few of them. In some of them the contracts are altogether unlike the one now before us, and in many others the analogy is very remote.

In the present case the party to inspect and approve was in fact, and by the agreement was required to he, an agent of the company, and his sole duty was to determine whether the ice which the plaintiff proposed to deliver, corresponded in size and quality with the specifications contained in the contract. We are all of opinion that if a jury, upon sufficient evidence, should find that this agent rendered a fraudulent judgment, or, what is the same thing, rejected the ice in bad faith, the company would he responsible; and this position is supported by the weight and current of authority. In the case of the Balt. & Ohio R. R. Co. vs. Polly, Woods & Co., 14 Gratt., 447 , the decisions upon this subject are reviewed in a very able opinion delivered by Monouke, J. In that case suit was brought by a contractor under a construction contract which contained the usual clause, to the effect that the final estimate of the company’s engineer, as to the quantity, character, and value of the work done, shall be conclusive between the parties, and the Court said: “ By the express contract of the parties the final estimate of the defendant’s engineer is made the condition precedent of the defendant’s obligation to pay for the work; and there is nothing unlawful in the contract. But, while the defendant is bound only to pay the amount of the final estimate of its own engineer, that estimate must be valid in equity as well as at law.

If it be a fraudulent estimate, the defeudant cannot take /advantage of it. To do so would be, in a manner, taking advantage of the defendant’s own wrong. A principal } cannot take advantage of the fraud of his agent, even though he did not actually participate in the perpetration ⁴¹³ of the fraud.” The doctrine that fraud in the engineer in making such estimates will vitiate them, and allow the contractor to recover against the defendant company, upon other proof of the quantify and value of the work done, was conceded by this Court in the cases of Wilson vs. York and Maryland Line Railroad Company, 11 G. & J., 58 , and Balt. & Ohio R. R. Co. vs. Resley, 7 Md., 297 ; and, in fact, seems to have been recognized as well settled law in all the adjudications in which the question has arisen. The inquiry then is, is there any error in the instructions given to the jury upon this subject by granting the defendant's first, second, third, fourth, and fifth prayers ?

The substance of the first instruction is that it was incumbent on the plaintiff to prove that Legge did approve of the ice submitted for his inspection and approval, unless the jury find that he rejected it fraudulently or in bad faith. If we are right in the construction of the contract, and in the views already stated as to the law governing the case, there can be no possible objection to this instruction. The jury were then told by the second instruction that the onus of establishing the fraud or bad faith mentioned in the preceding prayer, is on the plaintiff; that the presumption is always against fraud, and that it is not to be assumed on doubtful evidence, but the facts constituting it must be clearly and satisfactorily established. This is simply the statement of an elementary principle everywhere conceded, and recognized in all the authorities.

There was clearly no error in announcing it to the jury in this case, and, indeed, no objection was made to it by the appellant's counsel in their arguments. By granting the fourth prayer, the jury were instructed that it was not sufficient for them to believe, from the evidence, that Legge unreasonably rejected the ice, unless they find that his action in this respect was fraudulent or ⁴¹⁴ done in bad faith; and by the fifth instruction they were told that it is not enoug’h to establish the fraud charged ; that they may believe, from the evidence, that Legge rejected ice which they may believe he ought to have accepted, or that he rejected ice which, in their opinion or that of others, corresponded in all particulars with that described in the agreement; but in order to maintain the