186 P. 702 | Mont. | 1920
Lead Opinion
delivered the opinion of the court.
The plaintiff instituted this action to recover from the defendant the sum of $1,016.75, alleged to be due for electricity furnished for lights and power during the months of May, June and July of the year 1915, at its special instance and request. The respondent admits the use and consumption of the electricity as alleged, but contends that said electricity was fur
The ease was tried in the district court on an agreed statement of facts, from which it appears:
1. That on the third day of December, 1909, appellant and respondent entered into a written contract by the terms of which the appellant agreed to furnish to the respondent “all the electric current the railway company may require for lighting and power purposes at its pumping station — approximately two and a half miles west of the Northern Pacific Passenger Station, and at its roundhouse, machine-shop, ear-shop, coal dock, passenger and freight stations, lunch-room, offices and other buildings and premises at Helena, Montana.”
2. This contract or agreement was to continue in force for a term of five years from the date of the installation of the secondary lighting and power systems of the company, which installation was not completed until April 30, 1910.
3. The contract further provided that the railway company reserved the right, at its option, upon giving the power compány thirty days’ written notice prior to the expiration of the contract, “to renew the same for an additional period of five years. ’ ’
4. The rates fixed by the contract for electric current for power and light were about one-third the regular rates in effect in the months of May, June and July, 1915.
5. It is agreed that “the inducing cause or reason for entering into such a contract by the plaintiff at.the rates for electric current therein named was that the defendant was to use electric current and power at its pumping station — but the plaintiff did not state to the defendant what the inducing cause or reason was for entering into the contract.”
6. The agreed statement of facts recited further “that at or prior to the making of said contract neither the defendant nor its agent or representatives made any statement or representa
7. The power company performed its part of the contract, and in doing so expended the sum of $948.78, in erecting a system to supply the current at the pumping station.
8. The railway company lived up to the terms of its agreement in all particulars, save and except that on or about November 27, 1913, it abandoned its pumping station, and consequently, since that date has used no electric current at or for the pumping station, which fact was known to the power company within thirty days thereafter, and no objection or protest was made by the power company to such abandonment or discontinuance of the use of electric current at the pumping station, but continued to furnish, and collect for, electric current, as formerly under the contract.
9. That on the twenty-first day of January, 1915, and within the time provided for in the contract, respondent notified appellant in writing that it desired to renew the contract for the additional term of five years under the option contained in the contract.
10. On April 28, 1915, the appellant notified respondent in writing that it would not renew the contract, on the ground that the respondent was “guilty of a breach of the contract in part during its existence”; the breach, as stated in the notice, consisted in the abandonment of the pumping station and the discontinuance of the use of electric current at that point, which, the notice recites, “was one of the principal items of the contract and greatly influenced in making the reduced rate”; and, continuing, said notice advised the railway company that from and after May 1, the power company would furnish light and power to the railway company at the rates regularly filed with the Public Service Commission.
11. It is further agreed that the current used by respondent at the pumping station amounted to 24% per cent of the electricity used by respondent under the contract.
The question here presented is: "Was there, during the months of May, June and July, 1915, a valid and existing contract in full force and effect ? Appellant contends that the contract was one which could not be renewed, for the following reasons:
1. That the respondent company violated the terms of the contract by abandoning its pumping station and its refusal to take any power.
2. A renewal of a portion of the contract only is desired.
3. Such contract is unlawful under the present statute.
We will take the matters suggested up in order and under the subheads employed in appellant’s brief.
1. The “inducing cause” referred to in the statement of facts
Counsel contends that courts must give to a contract such a construction as was within the contemplation of the parties at the time they entered into it. This is true, but an “inducing cause” or motive, hidden in the breast of one, does not come within the rule. This court has said, in the case of Armington v. Stelle, 27 Mont. 13, 94 Am. St. Rep. 811, 69 Pac. 115; “Even if everything that was said and done at the time the lease was executed by the defendants were admissible, as defendants contend, for the purpose of showing what the con
Mr. Elliott, in his work on Contracts, section 204, has this to say on the subject: “The ‘motive’ for entering into a contract and the ‘consideration’ of the contract, are not the same. An expectation of certain results is often the motive which leads to the formation of a contract, but neither the expectation nor the result necessarily makes the contract binding. Nothing is consideration that is not regarded as such by both parties.”
Here, there was no representation by the railway company as to continuous use of electric current at any one point designated in the contract, and if the agents of the power company labored under an erroneous opinion of the value of the contract by reason of the contemplated use of current at the pumping station, uncommunicated to the railway company, the courts are powerless to assist or relieve appellant.
“Whatever may be thought of the propriety, from a moral standpoint, of holding a person to a contract into which he entered under a mistake as to a collateral material fact, the law is confronted with the necessity of adopting a rule which will make it possible to enforce contracts at all. Accordingly, the rule adopted by the great weight of authority is that mere mistake in the inducement is not operative and that a contract induced by reason thereof is perfectly enforceable and valid. A mistake of this sort is ‘an error for which the law furnishes no relief.’” (Page on Contracts, see. 155; see, also, 9 Cyc. 320; Philpot v. Grunninger, 14 Wall. 570, 20 L. Ed. 743 [see, also, Rose’s U. S. Notes]; Peck Colorado Co. v. Stratton, 95 Fed. 741; Levy & Kohn Mule Co. v. Kaufman, 114 Fed. 170, 52 C. C. A. 126; Armington v. Stelle, supra; Cream of Wheat Co. v. Crist Co., 222 N. Y. 487, 119 N. E. 74.)
The circumstances under which a contract is made, or the
2. New Contract. It is admitted by respondent that, if the contract is renewed, it does not desire to renew in so far as the use of electric current for power purposes at the pumping station is concerned. This, appellant contends, calls for a new and different contract from that originally entered into.
The contract set out in the answer obligates the appellant
Eespondent’s notice of renewal is silent as to the pumping station and declares generally its intention of exercising, and the exercise of the option to renew the contract, and evidences the intention of the respondent to continue to use all of the electric current required by it for lighting and power purposes.
Appellant contends that there is evidenced an abandonment of the use of power and only an intention to use current for lighting purposes; the facts stipulated do not bear out this contention. From the contract and from the agreed statement of facts, it would appear clearly that the use of electric current at the roundhouse, machine-shop, car-shop, coal docks, passenger and freight depots and other buildings, was “for lighting and power,” without regard to the amount of current required for either purpose.
We are of the opinion that the abandonment of the pumping station was not a breach of the contract as executed between the parties hereto, and that, if a renewal could be effected, the renewal was of the contract in toto and not a renewal in part.
3. Contract Unlawful. Section 12, Chapter 52, of the Session Laws of 1913, makes it unlawful for any public utility to make rates to any person or corporation differing from those contained in their schedule filed with the Public Service Commission, but provides that the Act shall not have the effect of suspending, invalidating or in any way affecting existing contracts.
The original contract was executed before the passage of the Public Utility Act of 1913, its expiration date and attempted renewal under the option subsequent thereto. It therefore becomes important to determine whether the option called for the execution of a new contract or the extension of the original term of the contract for an additional five years. In other words, would the contract, after the exercise of the privilege contained in the option, come within the exception contained in the final clause of section 12 of the Public Utility Act ?
In the case of Howell v. City of Hamburg Co., supra, where the option clause was similar to the one here, the court said: “The authorities fully support the claim of learned counsel for the plaintiff that the covenant for renewal of a lease, at the option of the lessee ‘imports the giving of a new lease. ’ * * * On the other hand, if the lessee is simply given, by the original
In Briggs v. Chase, cited above, the court said: “The clauses of the instrument in question are found in the habendum which read: ‘to have and to hold for the term of one year from the date hereof with the privilege on the part of the said Chase to renew at the same rental for any term not exceeding ten years from the expiration of said one year term.’ And the following stipulation concerning the right of renewal: ‘It is mutually understood that the said right of renewal as stipulated shall be wholly optional with the said Chase, and that said renewal, while in all other respects the same as in this lease, shall com tain no further right of renewal except by mutual agreement.’ * * * No new lease was called for. * * * It would have been precisely like the original lease except the term. This was left to the lessee. “Whatever he might choose — 1, 5 or 10 years— would be in exact accord with the contract of the lesson The plaintiff could insist upon a complete fulfillment. The defendant was equally bound. A new lease would be a useless form-. The defendant’s election, if he made it, to continue, extended the stipulations of the original lease to his new occupancy. He
•In Hammer v. Dahlman, supra, the court said: “The complaint alleged the execution, in writing and under seal, by the defendants of a lease for one year, with the privilege to the plaintiff at their option, to renew the same for four years more at the same annual rental, and on the same conditions, on giving notice three months beforehand. * * * Here was not a ■mere covenant on the part of the lessor to give a new lease on demand or on certain conditions, but a covenant that the lessees themselves might at their option renew the lease for four years by giving the notice required, which notice was duly given and accepted by the defendants. * * * The covenant in this case, we believe equivalent to a covenant that on giving the required notice, the lease should continue in force for the additional term, and in either ease the effect of the notice is, of itself, to create the new term without the execution of a new lease by the lessor.” (Citing TMebaud v. Bank, 42 Ind. 212; Dix v. Atkins, 130 Mass. 171; Bmlet v. Cook, 44 N. II. 512, 84 Am. Dec. 92.)
In Kentucky Lumber Co. v. Newell, 32 Ky. Law Rep. 396, 105 S. W. 972, cited above, the renewal clause read as follows: “For a, period of five years with the privilege of renewal from year to year as long as the second party may want said land,” etc. The court, in construing the clause said: “The contract, although it uses the word ‘renewal’ does not contemplate a renewal lease, as that term is used in the law boots. The whole instrument, and the nature of the use of the leased lands as provided for in the lease, show that nothing more was contemplated than that the lessee might continue the terms by its mere election and the payment of the rent. The word ‘renewal’ was evidently used in the sense of extending; it being clearly shown in. the document that not another term was to be agreed upon, but that the original term and use were to be extended at the option of the lessee. This is a demise in praesenti.”
If upon a reasonable construction contracts may be upheld,
•Here the railway company was given the option to renew the contract for an additional five years, on giving thirty days’ notice to the power company, before the expiration of the contract; in giving notice of its intention to avail itself of the privilege, as in the Sowell Case, it did not demand a new lease, but stated that “in accordance with the provisions of the contract (it) hereby elects to renew and extend the said contract for the additional period of five years,” etc. The power company did not, by the terms of the contract, bind itself to execute a new lease, nor could it have been compelled to do so. No new lease was necessary; the rights and obligations of the parties were fixed by the terms of the original contract. The
“No question can arise in regard to the consideration. The stipulation that the lessee should have ‘the privilege of-renewing’ was a part of the consideration for which he took the lease, and agreed to pay the sum of $160, per year.” (Briggs v. Chase, supra.)
Being a substantial right and a part of the original contract,
It is objected that such a construction would create a [9] perpetuity by extending the contract even as to the clause for renewal. Here again the contract must be interpreted according to the intention of the parties. No such intention can be gathered from the reading of the contract; but one renewal is provided for and but one intended, and the authorities uniformly hold that a renewal or extension, under like provisions, extends the contract with respect to all of its terms and conditions, with the exception of the extension clause. (Rutgers v. Hunter, 6 Johns. Ch. (N. Y.) 215; Piggot v. Mason, 1 Paige (N. Y.), 412; Ryder v. Jenny, 25 N. Y. Super. Ct. 56; Muhlenbrinck v. Pooler, 40 Hun (N. Y.), 526.)
Counsel for appellant contends that the Public Utility Act
The exempting clause in section 12 of the Public Utility Act declares that the Act shall not “in any way affect exist* ing contracts.” This is analogous to the constitutional prohibition against the impairment of the obligation of contracts, under which it is held that “if any subsequent law affect to diminish the duty or to impair the rigbt which the law defines, upon the consummation of a contract, it necessarily bears on the obligation of the contract, in favor of one party, to the injury of the other; hence any law which in its operation amounts, to a denial or obstruction of the rights accruing by the contract * * * is directly obnoxious to the prohibition of the Constitution.” (8 Cyc. 932; Ogden v. Saunders, 12 Wheat. 213, 338, 6 L. Ed. 606 [see, also, Rose's U. S. Notes].)
“Since the prohibition as to the impairment of the obligation of contracts is absolute, the amour t of the impairment is immaterial. An Act which, in any degree, no matter how slightly, modifies the obligation of a contract, by attempting to-relieve one party from any duty assumed by the contract, is repugnant to the constitutional prohibition.” (6 R. C. L., sec. 319; Farrington v. Tennessee, 95 U. S. 697, 24 L. Ed. 558 [see, also, Rose’s U. S. Notes]; Smith v. Norfolk etc. Co., 112 Va. 192, 38 L. R. A. (n. s.) 1016, 70 S. E. 482; Oshkosh Water Works Co. v. Oshkosh, 109 Wis. 208, 95 Am. St. Rep. 870, 85 N. W. 376.)
It is conceded that the contract in question was valid at the time it was entered into by the parties, and up to the time of' the passage of the Public Utility Act; it must be conceded that, had the contract been entered into after the passage of the Act, it would have been invalid; it must be conceded, further, that, had it not been for the incorporation, in section 12 of the Act,
“The statute itself furnishes the best means for its own exposition, and if the sense in which words were intended to be used can be clearly ascertained from all its parts and provisions, a resort to extrinsic facts is not permitted.” (36 Cyc. 1136, and cases cited.)
The intention of our legislature can only be ascertained from their clear and positive declaration contained in the Act as they wrote it: that “this [the Public Utility Act], however, does not have the effect of suspending, rescinding, invalidating or in any way affecting existing contracts.” To hold, in the face of the' plain and explicit provision of the statute, that its exemption does not extend to one of the substantial rights of one of the contracting parties, would not be interpreting the statute as we find it, but would be judicial legislation.
As the option to extend the contract was a substantial right which respondent could have enforced, in the absence of any
The judgment is affirmed.
Affirmed.
Dissenting Opinion
I dissent. In construing a statute, the courts are required to consider not alone the words employed, but as well the general purpose of the Act and the evils sought to be remedied. The purpose of the statute creating the Utilities Commission and defining its powers and duties was to bring the public utilities of the state under governmental control. The overshadowing evil to be remedied was the prevention of unjust discriminations in service and rates — to abolish ■all gratuitous rebates and special privileges. It was made unlawful for any public utility to charge a greater or less compensation for service than that established by the commission. With these declared purposes in view, it would seem to be a fair construction of section 12 to hold that the saving clause applies only to contracts then in force, and that it was never the intention of the legislature to extend immunity to renewals -or extensions of such contracts.