Speed v. Bailey

Digges, J., delivered the opinion of the Court. This case comes before us on a demurrer by the defendants challenging the legal sufficiency of the plaintiff’s cause of action. The declaration includes as a part thereof a bill of particulars, and the demurrer is to1 the whole declaration. The demurrer being overruled, the case proceeded to trial, resulting in a judgment for the plaintiff for the amount claimed.

The single question presented by the record is the correctness of the ruling of the lower court on the demurrer. The bill of particulars is unusual, and, as far as we have been able to discover, unlike any other upon which we have been called to pass. It consists of a contract of sale by the defendant Fletcher B. Speed to the plaintiff of a lot of ground situate in Baltimore County, and an agreement to finish the construction, then under way, of a two'-room bungalow, according to the plans and specifications drawn by G. F. jSTeuclecker, architect, the plaintiff agreeing to pay therefor the sum of $14,000, of which $2,000 is acknowledged to have been paid prior to the signing of the contract, and the balance to be paid as follows: $8,000 cash in sixty days, and $4,000 in a second mortgage at six per cent., to be paid at the raite of $500 yearly, and, upon the payment as: above stated of the unpaid purchase money, the vendor agreed to give a deed for the property at the expense of the vendee, which would convey the property by a go'od and merchantable title to the vendee. The date of the contract is December 8th, 1924, and it is signed and sealed by the defendant Fletcher B. Speed and the plaintiff Theodore H. Bailey, Jr., and witnessed by Mary B. Speed. ⁶⁵⁸ Attached to and forming a part of the contract are specifications designated “general specifications of dwelling for E. B. Speed, Oatonsville, Md.” The specifications in many plapes call for the furnishing of material of sizes designated in the plans and mentioned in the agreement of sale, but the plans are not attached to the agreement of sale and do not appear in the record.

In addition to these general specifications and agreement of sale, there appears as a part of the bill of particulars a letter written by the attorney of the plaintiff to the attorney of the defendants, and the reply of the last mentioned attorney to that letter. The letter written by the attorney for plaintiff, dated February 10th, 1925, contains a statement of what purport to have been certain verbal modifications of the written contract, and complains that the defendants have failed to complete the building in accordance with these verbal modifications. The reply to that letter, dated February 13th, 1925, by the defendants’ attorney, acknowledges that the defendant promised to do certain of the things complained of as not having been done, and denies others as having been a portion of the oral modifications of the contract. This letter further espressos the willingness and ability of the defendant to perform all that he admits he promised to perform, and concludes with the demand that the plaintiff make immediate settlement for the property in accordance with the contract.

The theory of the plaintiff, upon which this suit was docketed and the case tried, is that by reason of the fact that the defendants had not fully complied with their contract to build a house according to the written and oral specifications, the plaintiff was entitled, because of that breach, to rescind the contract and recover back the initial payment of $2,000; and, further, that although Mary R. Speed was not a party to the written contract, she being the owner of the land, her husband was acting as her agent, and that if the evidence showed that he was her agent, there might be a recovery against her, or if the evidence showed that it was ⁶⁵⁹ a joint venture of husband and wife, he could recover against both. When a bill of particulars of the whole declaration, including the common counts, is filed, a demurrer to the whole declaration should be tested by the sufficiency of the cause of action thus particularized. Noel Const. Co. v. Armored Construction Co., 120 Md. 237 ; Thompson v. Young, 90 Md. 72 ; Scolt v. Leary, 34 Md. 389 ; Nelson v. Close, 147 Md. 214 .

We have here a declaration including the common counts, together with a bill of particulars which is co-extensive with the entire demand; therefore, when testing the validity of the demurrer to the whole declaration, we must consider the sufficiency of the common counts particularized as set forth in the bill of particulars. The effect of the bill of particulars here filed is to show the plaintiff’s emcire cause of action under all the counts of his declaration. The demurrer interposed after the filing of such a bill of particulars admits the cause of action to be as therein stated, but denies that it furnishes any ground of action. The appellant claims that the declaration is defective because it shows on its face the following facts: First, that the defendants were not in default at the time the plaintiff rescinded the contract; second, that the plaintiff was in default at the time he rescinded the contract; third, that the plaintiff did not tender performance of his obligation under the contract at or before the time he rescinded it; and, fourth, that the sealed contract on which the deposit was made was not signed by both defendants.

The validity of the first objection to the declaration must be determined by the decision of the question of whether or not the declaration shows a substantial performance of the contract by the defendants. If the declaration shows that there has been a substantial compliance with the terms of the contract, but there has been a failure to complete some of the minor details, or there have been unimportant and unintentional variations from the terms and specifications of the contract, then the plaintiff is not at liberty to rescind the contract and recover back the deposit, but must proceed at law ⁶⁶⁰ and recover such damages as are occasioned by the breach. The general rule is thus stated in 6 R. C. L. 926-921: “It is not every partial failure to comply with the terms of a contract by one party which will entitle the other party to abandon the contract at once. In order to justify an abandonment of it and of the proper remedy growing out of it, the failure of the opposite party must be a total one- — -the object of the contract must have been defeated or rendered unattainable by his misconduct or default.

Eor partial derelictions and non-performance in matters not necessarily of first importance to the accomplishment of the object of the contract, the party injured, must seek his remedy upon the stipulations of the contract itself. Before partial failure of performance of one party will give the other the right of rescission, the act failed to be performed must go to the root of the contract, or the failure to perform the contract must be in respect to matters which would render the performance of the rest a thing different in substance from that which was contracted for. * * * When a covenant goes only to a part of the consideration of a contract, is incidental and subordinate to its main purpose, and its breach may be compensated in damages, such a breach does not warrant a rescission of the contract, but the injured party is still bound to perform his part of the agreement, and his only remedy for the breach consists of the damages he has suffered therefrom.” By this rule, compensation in damages for slight breaches is substituted for the remedy afforded by rescission of the whole contract. The rule rests upon the principle that greater equity will be maintained between the parties by compelling the one, injured by slight variances or failure to comply literally with all of the terms of the contract, to accept the contract as performed and recover such damages occasioned by the breach as he may be able to show. A departure from this rule would result in permitting any deviation, no matter how minute or unimportant, to be made the basis for the rescission of the contract, and allowing the one so rescinding to obtain an unfair and unconscionable advantage by electing to rescind or retain the bargain, as self-interest might die ⁶⁶¹ tate.

The great weight of authority shows a recognition of this principle by the courts, although they are not entirely harmonious. The real and substantial difficulty has been in applying the principle to the varying facts of each particular case. The rule has been more widely applied to building contracts, for the reason that it was found to bo inequitable to allow the owner of the land to rescind a contract for tho erection of a building upon his land, and thereby retain the benefits resulting from a substantial performance of the building contract, without any obligation to pay therefor. While the above is true, tho application of the doctrine of substantial performance has not been confined to building contracts, but has been applied in many cases where the breach was relatively small as compared to the whole contract and did not go to the root of the contract; that is to say, it is applied where the breach complained of is inconsequential in its nature and is readily compensated for by damages.

In the case of Ady v. Jenkins, 133 Md. 36 , in which the contract was for the sale of a pack of canned corn for the season of 1917, known as Hyde’s Egyptian Corn, it was contended that the failure of Jenkins to deliver labels by the first of August was sufficient reason for Ady to rescind the contract. In passing upon that question, the court, after recognizing the law as being well settled that, when there has been substantial breach of a contract, the other party has a right to rescind the contract or to refuse to perform it and sue for damages, quoting from Brantly on Contracts, page 415, said: “It is not, however, every breach of