Henningsen v. Tonopah & Goldfield Railroad

33 Nev. 208 | Nev. | 1910

Lead Opinion

By the Court,

Tálbot, J.

(after stating the facts as above):

' In elaborate and carefully prepared briefs some propositions have been argued which are not deemed strictly applicable to this case. We will consider more particularly the contentions of appellant that the agreement of November 28, 1905, was not' authorized by or binding upon the railroad company; that the evidence is insufficient to sustain the verdict, because it is asserted that Henningsen owed the railroad company, and consequently had forfeited the contract at the time the company sought to cancel it; that the damages were excessive; and that the instructions of the court were erroneous or prejudicial.

It does not appear that there was any resolution of the board of directors of the railroad company directing the sale of the ties, or ratifying the contract after sale. We need not speculate as to whether the general superintendent of a railroad as ordinarily officered and managed would have the right, under his usual powers, to sell discarded ties without special authority from the board of directors.

At á meeting in Philadelphia, Alonzo Tripp had been employed to come to Nevada and to build and operate the road. This building of the road consisted, in part, of broad-gaging that portion of it from which the narrow-gage ties in dispute were taken. The facts that some of the bills collectible, marked " Paid, ” were credited to broad-gaging on the forms of the company, bearing the printed direction that remittance be made to Alonzo Tripp, general superintendent, that one of them, signed by him, approved by the auditing officers, and receipted by the assistant treasurer, referred expressly to the contract, and the others were for ties at the contract price, and the other circumstances indicate that the ties were subject to disposition under the general powers he was exercising. He was the head officer, charged with the control and management of the road in the state where it was situated.

The power to build, broad-gage, and operate the road would seem to carry with it the authority to sell ties which were being discarded or removed as the road was being broad-gaged. As the ties were being stolen and burned, it was to the advantage of the company to have them sold, and we think that under the general authority given and conditions shown he could make a contract for the sale of the ties as binding as contracts made by him for the furnishing of new or broad-gage ties, or of fuel for the operation of trains, and that it was not necessary to have a special resolution of the board in Philadelphia for every transaction relating to the construction and operation of the road. The general authority of Tripp could be fairly implied to authorize him to conduct the ordinary operations and legitimate business of the road, within which would be included the disposition of narrowgage ties taken out while he was broad-gaging the road. In this connection we distinguish and- do not disagree with cases which have been cited where the conditions were different, and wherein it was held that officers of a company were not authorized to sell or mortgage real estate or other property not in line with the ordinary business of the company without special authority from the board of directors.

If the execution of the contract had not been authorized in the first instance, the circumstances are such as to raise the presumption that it was ratified. When we consider that prior to the making out of the contract the president assented to the statement of Tripp that they ought to get rid of the narrow-gage ties; that this contract was drawn up by the regular attorneys for the company and turned over to the auditor; that deliveries of ties under it were made for about six or seven months after its execution under the direction and supervision of Tripp, the head officer of the company in control of its business in the state, of his successor, Hedden, and of the auditor, chief clerk, and assistant treasurer of the company; that bills collectible, showing the sale of the ties as per the contract and at the contract price, and the receipt of payments for them, on the blanks of the company, were made out and approved by these officials and filed in its accounting department; that Tripp notified Brock, the president of the company, by letter to the head office of the company in Philadelphia, of the execution of the contract soon after it was made, and a little later showed him the contract-when he came to Tonopah — we must conclude that the company knew, or ought to have known, that the contract had been executed, that the ties were being delivered, and that money was being received for them. By the knowledge with which it was chargeable and the conduct of its various officers, and by its acts and acquiescence in these conditions during this long period, the company would have become bound by the contract if its execution had not been authorized.

In the case of Edwards v. Carson Water Co., 21 Nev. 469, to which, with others, we have been cited, the facts were far from similar to the conditions in the present case, and a different principle of law applied. It was there sought to recover from the corporation on an obligation which had been originally due from the president of the company individually, but for which he had signed a note as president of the company. In that case this court said: "In the case of Frenkel v. Hudson, 82 Ala. 162, Somerville, J., in speaking of the general rule that the knowledge of the agent must be imputed to the principal, said: 'It has no application, however, to a case where the agent acts for himself, in his own interest, and adversely to that of the principal. His adversary character and antagonistic interests take him out of the operation of the general rule, for two reasons: First, that he will very likely in such case act for himself, rather than for his principal; and, secondly, he will not be likely to communicate to the principal a fact which he is interested in concealing. It would be both unjust and unreasonable to impute notice by mere construction under such circumstances, and such is the established rule of law upon this subject.’ (Mechem Ag., sec. 723; Ang. & A. Corp., secs. 308, 309.)”

Some of the cases make a distinction between ratification of an unauthorized act and such laches as will be held to estop from denying the granting of authority. (2 Morawetz, Corp., sec. 628.)

In Kelsey v. Bank, 69 Pa. 429, the court said: "The law is well settled that a principal who neglects promptly to disavow an act of his agent, by which the latter has transcended his authority, makes the act his qwn; and the maxim which makes ratification equivalent to a precedent authority is as much predicable of ratification by a corporation as it is of ratification by any other principal, and it is equally to be presumed from the absence of dissent. ”

In Murray v. Lumber Co., 143 Mass. 250, 9 N. E. 634: "When the alleged principalis a.corporation, a ratification may be shown by proving that the officers who had the power to authorize the act knew of it and adopted it as a valid act of the corporation, although no formal vote is passed by them.”

In Morawetz on Corporations, secs. 630, 633, it is said: "The ratification by a corporation, acting through one of its agents, of an unauthorized act performed by an inferior agent, may be shown in the same manner as a ratification by the company directly. Acquiescence is good evidence of consent, and if the agents of a corporation who have the power to. ratify an unauthorized act performed by another agent manifest no dissent after full notice, a ratification of the act may often be presumed. In some instances a principal may be estopped from repudiating an unauthorized act, of which he had no actual knowledge; as where the principal ought by reason of the relation of the parties'to have known of the act, and cannot in equity and good conscience set up his ignorance.”

In Olcott v. Tioga Railroad Co., 27 N. Y. 546, 84 Am. Dec. 298, where the question was whether the corporation had ratified the unauthorized act of the president in executing a bill of exchange, the court said: "But the subsequent rendering of accounts to the board of managers containing entries of such payments, unobjected to on the part of the board, affords a strong presumption of a ratification of those acts.”

In Conover v. Insurance Co., 1 N. Y. 290, 292, it was said: "And it is insisted that inasmuch as the board never by any formal act- gave their sanction, and the by-laws required the consent in writing of the directors to any conditional alienation by mortgage subsequent to the insurance, the consent in this case was unauthorized and void. I cannot subscribe to this doctrine. The directors were bound to know the uniform course pursued by their sole agent in the transaction of their business at their office, especially where regular entries of his acts were made in their books; and they must be held responsible on the ground of a tacit assent and approval, unless they can show by a strict vigilance and scrutiny into his acts they were unable to ascertain the course he was pursuing, and could not, therefore, arrest it or put the public on their guard. ”

In Union Gold Mining Co. v. Bank, 96 U. S. 640, 24 L. Ed. 648, the president of the mining company was informed of the indebtedness incurred without authority by the general manager, and the company did not within a reasonable time repudiate the act of the manager in borrowing the money. It was held that such notice to the president was notice to the company, and that the jury were authorized to conclude that the company had consented to what had been done in its name. In a concurring opinion it was said: "I grant that if, by such attention to its affairs as a man of ordinary prudence in the like case would have exercised, the corporation might have informed itself of Becker’s doings, it is the same as if they had actual knowledge. The corporation ought not to be heard to say that it did not know that which by the ordinary diligence which the law exacts of them they might have known.”

It is unnecessary to advert further to the numerous cases maintaining this legal principle. As the contract states that the company "is the owner of a quantity of narrow-gage ties heretofore used in the construction, maintenance, and operation of the line of railroad prior to standard-gaging the same,” and provides for the sale of "all and singular the stock of narrow-gage ties now owned by the first party and distributed at various places along the line of the first party’s railroad,” and that the "agreement shall remain in force and effect until the first party has delivered to the second party all of the ties above mentioned,” we conclude that the contract covers all the narrow-gage ties which the company removed in broad-gaging the track, or which it had on hand at the time the agreement was made.

It is not necessary to determine whether the narrowgage ties which were not removed, and which were never intended to be removed, from the sidetracks or the main track, if all were not removed from the main track, were included in the agreement; for they are conceded to the appellant by the respondent, and therefore may be treated as a part of the track, instead of ties, within the meaning of the contract. It is not assumed that there was any intention to sell, or ratify the sale of, ties that were not to be removed from the track.

Appellant claims that the ties which were used by the company in platforms, buildings, and bunkers were not intended to be included in the agreement; but the contract makes no exception in this regard. If, after making this contract, which reserves no ties for these purposes, the company could exempt any ties it desired or needed, it could have used all the ties for building or-other purposes, and thereby nullify the contract entirely, or at any time it desired after a part of the ties had been delivered. Hence the contract did not allow the company to make any such reservation, which, if contemplated or desired at the time of its execution, ought to have been made one of its terms. It bound Henningsen to take all ties, without reservation, within a reasonable time (9 Cyc. 611, b), and if the company had not desired to use any for its own purposes it could have required him to take all of them, and standing on the other side of the agreement he was entitled to have all of them.

It is urged that Henningsen breached the contract because he had not been paid for all the deliveries at the time Hedden, the general superintendent, wrote Henningsen, July 16, 1906, that he considered that by reason of nonpayment Henningsen had violated and abrogated the agreement. Many of the decisions are conflicting as to whether the refusal of a purchaser to make payment for each delivery is ground for the cancelation of a contract providing for other installments. This discrepancy in some of the authorities is more apparent than real, because the circumstances are so variant as to give good reasons for different conclusions. In addition to several cases cited by appellant, holding that a failure by one of the contracting parties to pay at a stipulated time gives the other the right to terminate the contract, many other decisions are found both supporting and opposing this view.

In Ross-Meehan Foundry Co. v. Royer Wheel Co,, 113 Tenn. 370, 83 S. W. 167, 68 L. R. A. 829, 3 Am. & Eng. Ann. Cas. 899, under a contract for the purchase of castings providing for delivery during the term of three years, the failure of the defendant to make payment for castings delivered, as provided by the contract was held to give the plaintiff the right to decline to make further deliveries. There was- a delay of about nine months in making payment for the castings received, and complaint for failure to make payment for deliveries made. After quoting from section 1140 of Mechem on Sales, the court continued: "That author, after putting the question, 'Does the default of one party in delivering or paying one installment justify the other in treating the contract as at an end, or must the latter continue performance on his own part, relying on his action for damages to compensate him for the breach by the former? ’ proceeds then to discuss both English and American authorities. In summing up as to the English cases, he finds that the rule prevailing there is the one announced in the Mersey Steel Case (9 App. Cas. 434), before referred to. As to the American cases, in section 1148 he says, though not in harmony, 'that the view that the failure of either party to perform an essential term of the contract gives to the other the right to rescind that contract is sustained by the clear weight of American authority. ’ As enforcing this view the author refers to Norrington v. Wright, supra (115 U. S. 188, 6. Sup. Ct. 12, 29 L. Ed. 366), Pope v. Porter, 102 N. Y. 366, 7 N. E. 304, and McGrath v. Gegner, 77 Md. 331, 26 Atl. 502, 39 Am. St. Rep. 415. Pope v. Porter was a case in which there was a contract for the delivery of iron in two installments, and the seller made default in the delivery of the first, but offered to deliver the second, which the buyer refused to accept. The court held that the first failure of the seller justified the refusal of the buyer. * * * The case of McGrath v. Gegner, supra, was where the saíne rule was applied in favor of the seller upon a default in payment by the buyer. The contract there repudiated was for the sale of a lot of shells to be delivered in weekly installments, each of which was to be paid for within a week following its delivery. The buyer made default, and the seller repudiated the contract. * * * This view is also supported by Kokomo Strawboard Co. v. Inman, 134 N. Y. 92, 31 N. E. 248; Winchell v. Scott, 114 N. Y. 640, 21 N. E. 1065; George H. Hess Co. v. Dawson, 149 Ill. 138, 36 N. E. 557; Providence Coal Co. v. Coxe, 19 R. I. 380, 382, 35 Atl. 210; Rugg v. Moore, 110 Pa. 236, 1 Atl. 320; Branch v. Palmer, 65 Ga. 210; Baltimore v. Schaub, 96 Md. 534, 54 Atl. 106. On the other hand, New Jersey, in Blackburn v. Reilly, 47 N. J. Law, 290, 1 Atl. 27, 54 Am. Rep. 159, and other cases; Michigan, in West v. Bechtel, 125 Mich. 144, 84 N.W. 69, 51 L. R. A. 791; and the United States Circuit Court of Appeals for the Sixth Circuit, in Cherry Valley Iron Works v. Florence Iron River Co., 64 Fed. 569, 22 U. S. App. 655, 12 C. C. A. 306, and in Monarch Cycle Mfg. Co. v. Royer Wheel Co., 105 Fed. 324, 44 C. C. A. 523—adopt the rule announced in Mersey Steel Co. v. Naylor, supra, while the Supreme Court of Iowa, in Myer v. Wheeler, 65 Iowa, 390, 21 N. W. 692, held that such a contract was divisible, and that rescission would not be allowed unless the breach went to the whole consideration.”

In a note at 3 Am. & Eng. Cas. 901, it is said that under a contract for the continuing deliveries of goods, payment to be made at stipulated times for previous deliveries, the seller is not bound to continue delivery unless the purchaser is ready and willing to make payments as required by the contract, and reference is made to several cases. Further over' the note proceeds: "In Freeth v. Burr, L. R. 9 C. P. 208, Chief Justice Coleridge held that the mere nonpayment for the first portion of goods contracted for, unattended by any other act on the part of the purchasers, does not put an end to the contract, so as to disentitle the purchasers to maintain an action for the nondelivery of the second portion. * * * . In Midland R. Co. v. Ontario Rolling Mills, 10 Ont. App. 677, the Ontario Court of Appeal said: 'The true test in such cases is the one laid down by Lord Coleridge in Freeth v. Burr, L. R. 9 C. P. 208, fully approved of in the House of Lords in the recent case of Mersey Steel Co. v. Naylor, 9 App. Cas. 434. The question is, as explained by Lord Justice Bowen in that case in the Court of Appeal, 9 Q. B. D. 648, not whether the conduct of one party to the contract was inconsistent with the contract, but whether the conduct of one party to the contract was really inconsistent with an intention to be bound any longer by the contract. That must necessarily be a question of fact upon the evidence in each particular case. ’ ”

In Tucker v. Billing, 3 Utah, 82, 5 Pac. 554, a contract for the sale of lumber provided that payment be made for 20,000 feet as often as 25,000 feet were delivered, and that the balance be paid at the end of the year. It was held that the failure to make one payment for lumber delivered was no excuse for the refusal of the seller to further deliver lumber according to the terms of the contract. The court said: "The parties undoubtedly could have made the payment of any installment a condition precedent to a future delivery, and the nonpayment of any such installment such a substantial violation of the contract as to authorize the other- party to abandon it. But they have not; nor can it be inferred from the language used. ”

In Monarch Cycle Manufacturing Co. v. Royer Wheel Co., 105 Fed. 324, 44 C. C. A. 523, it was held that a contract for the sale and purchase of 2,000 bicycles at specified prices, monthly shipments to be made as specified by the purchaser, was an entire contract; that the failure of the purchaser to pay for the deliveries made within the time stipulated was not a renunciation of the contract, which justified the seller in treating it as abandoned, or absolved him from his obligation to make further deliveries, in the absence of a provision therefor in the contract, unless there was a refusal by the purchaser to pay in such terms as indicated a purpose on his part to renounce the contract.

In Hime v. Klasey, 9 Ill. App. 166, it was held that, as the contract did not make a failure to pay for a preceding installment a. condition precedent to the delivery of another, the vendor could not rescind the contract until there was a demand for payment and refusal.

In Myer v. Wheeler, 65 Iowa, 390, 21 N. W. 692, there was an agreement to sell ten carloads of barley, to be delivered from time to time. Upon the receipt of the first carload the purchaser refused to pay for the same because it was not equal to the sample, but urged shipment of the remainder of the barley, and promised to pay for future shipments. The seller refused to ship any more unless payment was made for the first carload. It was held that the contract was severable, that the refusal to pay for the first carload did not entitle the seller to rescind and refuse to deliver the other carloads, that the seller was entitled to recover for the value of the carload delivered, and the purchaser to recover damages for the failure to deliver the other nine carloads.

In Hansen v. Consumers’ Steam Heating Co., 73 Iowa, 77, 34 N. W. 495, the plaintiff had agreed to furnish to defendant, at a specified price, all the coal it would need during the season, the coal furnished during any months to be paid for on the 10th of the following month. It was held that the plaintiff could not declare the contract at an end on the failure of the defendant to pay at the time agreed for the coal already delivered, and recover the market value instead of the contract price for coal delivered thereafter.

In Blackburn v. Reilly, 47 N. J. Law, 290, 1 Atl. 27, 54 Am. Rep. 159, it was held that, on a contract for the sale of goods by successive deliveries and payment, a default in respect to one or more of these will not discharge the other party, unless it is evident that the defaulting party no longer intends to fulfill the agreement. The contract provided for the sale of one car of bark weekly for a year, at $18 a ton, payable on delivery.

In West v. Bechtel, 125 Mich. 144, 84 N. W. 69, 51 L. R. A. 791, it was held that the refusal of the purchaser of wood to keep his agreement to pay for each shipment as received, while he insisted on the complete delivery of the wood, did not constitute such an abandonment of the contract on his part as would justify the seller in his refusal to ship any more wood. After reviewing a number of cases, the court said: "The Supreme Court of New Jersey takes the same view of this question. (Trotter v. Heckscher, 40 N. J. Eq. 612, 4 Atl. 83; Blackburn v. Reilly, 47 N. J. Law, 290, 1 Atl. 27, 54 Am. Rep. 159.) In the latter case the English and American authorities were considered, and the rule adopted in the Mersey case was approved. The court said: 'The rule to be applied in determining whether the express obligations of such contracts remain, after one or more breaches by either party, has been the subject of much discussion of late years, and has given rise to some contrariety of judicial opinion. * * * In our opinion the rule established in England by the judgment of the House of Lords in Mersey Steel & I. Co. v. Naylor, L. R. 9 App. Cas. 434, affirming the judgment of the Court of Appeal in L. R. 9 Q. B. Div. 648, is one which in ordinary contracts of this nature will work out results most conformable to reason and justice. The rule is that defaults by one party in making particular payments or deliveries will not release the other party from his duty to make the other deliveries or payments stipulated in the contract, unless the conduct of the party in default be such as to evince an intention to abandon the contract, or a design no longer to be bound by its terms. This rule leaves the party complaining of a breach to recover damages for his injury on the normal principle of compensation, without allowing him the abnormal advantage that might inure to him from an option to rescind the bargain. * * * It, of course, is inapplicable where the parties have expressed their intention to make performance of a stipulation touching a part of the bargain a condition precedent to the continuing obligation of the contract; and peculiar cases might arise where the courts would infer such an intention from the nature and circumstances of the bargain itself — cases in which the courts would see that the partial stipulation was so important, so went to the root of the matter (to use a phrase of Blackburn, J., in Poussard v. Spiers, L. R. 1 Q. B. Div. 410), as to make its performance a condition of the obligation to proceed in the contract.' In New York the question was considered in the case of Cohen v. Platt, 69 N. Y. 348, 25 Am. Rep. 203, and it was held that a delivery of one invoice of glass that was inferior to that contracted did not justify the purchaser in refusing to take subsequent consignments of glass corresponding with the requirements of the contract. See, also, Ebling v. Bauer, 17 N. Y. Week. Dig. 497; Selby v. Hutchinson, 9 Ill. 319; Bloomington Electric Light Co. v. Radbourn, 56 Ill. App. 165; Gatlin v. Wilcox, 26 Ark. 309. The case of Meyer v. Wheeler, 65 Iowa, 390, 21 N. W. 692, is closely analogous to the present case. Plaintiffs sold defendants ten carloads of barley. Defendants were to pay 75 cents per bushel for each carload, when delivered. On receipt of the first carload the defendants refused to pay upon the ground that the barley was not equal to the sample, but stated that they had given plaintiffs credit for 65 cents per bushel and would withhold payment until the ten carloads were delivered, and urged shipment of the remainder. It was held that this did not entitle the plaintiff to rescind the contract, and that he was liable for damages resulting from nondelivery of the remainder. See, also, Burge v. Cedar Rapids & M. River R. Co., 32 Iowa, 101. A valuable note upon this subject will be found in Lake Shore & M. S. R. Co. v. Richards (Ill.) 30 L. R. A. 33. The authorities are reviewed in Norrington v. Wright, 115 U. S. 188, 6 Sup. Ct. 12, 29 L. Ed. 366, though the exact question before us was not involved. An interesting note upon that case at circuit will be found in 21 Am. Law Reg. (N. S.) 395, where the authorities, English and American, are collected. In 2 Benjamin, Sales, 909, the author says that 'In America the law appears to be fairly settled, in accordance with the case of Simpson v. Crippen, L. R. 8 Q. B. 14, viz, that in the absence of any expressed intention of the parties a contract for the sale of goods by successive deliveries is severable, and the failure to accept or deliver one installment does not entitle the other party to refuse delivery or acceptance of the installments that remain. ’ Only one case, King Philip Mills v. Slater, 12 R. I. 82, 34 Am. Rep. 603, has been found, in which the rule laid down in Simpson v. Crippen is directly attacked. The editor of American Notes to the fourth edition takes issue with Mr. Benjamin; but we think his views are not as well supported by the authorities as the review of Norrington v. Wright, by Mr. Landreth. See, also, Clark, Contr. 652, et seq., Lee v. J. B. Sickles Saddlery Co., 37 Mo. App. 201, and 1 Beach Modern Law of Contracts, 122, 123, 849, and notes.”

Some of the cases which require the strictest performance to avoid forfeiture relate to ordinary commercial transactions, and are based on the theory that promptness is for the protection of trade. A careful reading of the opinion in Norrington v. Wright, 115 U. S. 188, 6 Sup. Ct. 12, 29 L. Ed. 366, indicates that the Supreme Court of the United States considered mercantile contracts providing for separate deliveries in a class by themselves, and distinguished between the failure of the seller to deliver and the purchaser to pay. The language of the decision reconciles the conclusion in that case, that the failure of the seller to deliver according to the agreement allowed the purchaser to rescind, with the judgment affirmed by the House of Lords in Mersey Co. v. Naylor, 9 App. Cas. 434, holding that the failure of the buyer to pay for the first installment upon delivery did not entitle the seller to rescind and to decline to make further deliveries unless the circumstances evinced an intention on the delinquent buyer’s part to be no longer bound by the contract. In Norrington v. Wright, the court said: "And the grounds of the decision, as stated by Lord Chancellor Selbourne in moving judgment in the House of Lords, are applicable only to the case of a failure of the buyer to pay for, and not to that of a failure of the seller to deliver, the first installment. In the contract of merchants, time is of the essence. The time of shipment is the usual and convenient means of fixing the probable time of arrival, with a view of providing funds to pay for the goods, or of fulfilling contracts with third persons. ”

Uncertainty has arisen by reason of the failure of some of the courts and text-writers to recognize the distinction made in Norrington v. Wright, and by the unwarranted conclusion that the decision in that case promulgated a rule in this country contrary to the one in Mersey Co. v. Naylor. In view of the sharp conflict in the opinions of the eminent courts and leading text-writers, as indicated, and the circumstances of this case, we do not deem it necessary to determine whether ordinarily the failure to pay upon demand or statement rendered for one or more installments of goods or personal property delivered under a contract of the character of the one on which this action is based is sufficient ground for the cancellation of the agreement. Nor is it essential in reaching a conclusion to consider whether Henningsen in fact owed the appellant at the time it was sought to forfeit the contract; for not only have many of the courts held, as we have seen, that failure to pay for an installment will not necessarily work a forfeiture of the contract, but in this case prompt payment was waived. • If appellant be given the benefit of the doubt, and it be conceded for the argument that respondent breached the contract by failing to pay for the ties at the time the deliveries were made, the appellant by its own delay and conduct lost the right to rescind.

The letter or notice to Henningsen, claiming that he had forfeited the contract by nonpayment and that the company was no longer bound by it, was based on the assertion that he was owing the company about $900. In the final argument in this court the attorney for the appellant admits that two checks had been paid by Henningsen, amounting to about $1,200, which had been lost, which were not credited on the books of the company, and regarding which Hedden probably was not informed. When sending the notice he may have believed that the contract was forfeitable because payment had not been made at the time of deliveries; but he may have been prompted to send it more by the notice given by Henningsen a short time before that he would hold the company to account for ties it was using or selling than by any anxiety for payment. Henningsen was claiming that the company was owing him, and it does not appear that there was any intention on his part to make default on any payment which he believed to be due at the time the company sought to cancel the agreement. The notice contained no statement or demand for the price of any specified number of ties or definite amount of money, and no warning to Henningsen that he would not be supplied with more ties, as he had demanded, unless he paid for them on delivery, or paid for previous deliveries, and no demand for any payment as a condition precedent for making further deliveries. He would write at different times for a certain number of cars to be delivered at Tonopah or Goldfield, and they would be forwarded and delivered without any strict system of rendering statements or making collections. Under the terms of the contract the company was entitled to have payment made upon delivery, and was not required to make any deliveries without payment; but by making deliveries without rendering statements or demanding payment at the time deliveries were made, and by accepting payment later, the company waived payment at the time of making these deliveries. The transactions of the parties and the delays in settlements and payments which had been acquiesced in by the appellant led to dispute regarding the condition of the accounts.

By failure to collect for the ties at the times they were delivered, by accepting payments at varying times later and continuing to make deliveries, by failing to present bills collectible, other than those for which payments were made and accepted, before notice of forfeiture, the company allowed the delay in making payments to grow into a practice, until there was uncertainty regarding any balance due, and it was not justified in trying to cancel the contract at the time the notice claiming forfeiture was given, without at least first presenting a statement of the amount claimed, or making some demand and giving Henningsen an opportunity to pay. If appellant had exacted or demanded payment at the time of each delivery, and respondent had failed to pay, appellant would not have been obligated to make further deliveries without payment being made for them at the time of delivery.

In Eaves v. Cherokee Iron Co., 73 Ga. 459, there was a contract for the sale of 20,000 tons of iron ore, to be furnished at the rate of fifty tons per day, and it was held that when a contract is in writing each party has the right to expect the other to do exactly what he promises; but if, in the course of' its execution, some of its terms are departed from, and money is paid and received on that departure for some time, then before one of the parties can recover from the other for failure to pursue the letter of the agreement he must notify him with clearness of his purpose henceforth to stand on the original contract; that indefinite complaint is not sufficient, and that until there is distinct and emphatic notice that thenceforth the contract will be strictly enforced the departure is a sort of a new agreement. (2 Wharton on Contracts, 870, note.)

Mr. Parsons, in his work on Contracts (vol. 2, p. 835, 9th ed.) says: "It is a general rule that a party, having a right of rescission because of the fault or act of the other, should make known his rescission, as soon as may be after he knows his right to rescind. ”

In Byrne Mill Co. v. Robertson, 149 Ala. 273, 42 South. 1008, it is said that the right of a seller to terminate a contract of sale upon the refusal of the purchaser to perform by payment for goods already delivered may be waived by words or by conduct.

In Upton v. Sturbridge Cotton Mills, 111 Mass. 446, it was held that the delivery, apparently unrestricted, of goods sold for cash, was a waiver of the condition that payment must be made before the passing of the property, although the seller had an undisclosed intent not to waive condition.

In Hebron Mfg. Co. v. Powell Knitting Co., 171 Fed. 817, 96 C. C. A. 489, in a decision rendered after the case before us had reached this court, it was held that where, under a contract for the sale of yarn, to be delivered in weekly shipments, the purchaser made payments semimonthly, instead of ten days after each bill of lading, as required by the contract, and such payments were accepted by the seller and shipments continued, the seller could not cancel the contract because of such deviation from its terms, without reasonable notice to the purchaser. The court quoted with approval language from the opinions in Portland Ice Company v. Conner, 32 Pa. Super. Ct. 428, and Forsyth v. Oil Company, 53 Pa. 168; the language holding that where the parties have not exacted strict compliance with the conditions of the contract, or required prompt payment, lack of which was alleged as a ground for rescission, and liberal indulgence has been allowed, the contract cannot be suddenly rescinded without fair warning or such reasonable notice as would afford the other party an opportunity to adapt himself to the new situation.

In Southern Car Mfg. Co. v. Scullin, 38 Tex. Civ. App. 112, 85 S. W. 845, it was held that the fact that the purchaser in a contract for sale had not paid the seller for goods previously sold did not authorize the seller to rescind the contract.

In Martin v. Wirts, 11 Ill. App. 568, it was held that where there is an absolute and unconditional delivery of goods sold, without exacting performance of any condition precedent, the vendor will be presumed to have abandoned the security he had provided, and to háve elected to trust to the personal security of the vendee.

In Smith v. Lynes, 5 N. Y. 41, it is said that where goods sold, to be paid for on delivery by notes, are delivered to the purchaser without notes being given or demanded, the presumption is the condition is waived.

In Little Rock Cooperage Co. v. Lanier, 83 Ark, 553, 104 S. W. 222, the court said: "This testimony shows conclusively that the idea of a forfeiture for failure to pay promptly was not entertained at the time of such failure, but was an after-conception. Appellees should have been ingenuous and candid with appellant, and should have notified it, at the time of these alleged breaches, that they intended to insist upon them as forfeitures. Not having done so then, they cannot do so now.”

In United States Iron Co. v. Sloss, 71 N. J. Law, 1, 58 Atl. 173, it was said that a single shortage was not ground for the rescission of the contract by the buyer after acceptance of subsequent shipments of the quantity stated in the contract.

In Wolfert v. Ice Co., 195 N.Y. 118, 88 N. E. 24, 21 L. R. A. (N. S.) 864, it was held that the acceptance, by one who has contracted for ice to be delivered from day to day in such quantities as he may designate, of less than the quantity designated on a particular day, will prevent his rescission of the contract for refusal to deliver the entire amount of installment.

In McDonald v. Kansas City Bolt Co., 149 Fed. 360, 79 C. C. A. 298, 8 L. R. A. (N. S.) 1110, it was held that, in an entire contract for successive deliveries of goods sold, a vendor’s breach in the early deliveries may relieve the vendee from liability for subsequent deliveries, if prompt notice of refusal to perform is given, and that upon the discovery of the vendor’s breach the vendee has the option to perform or to refuse to perform the remainder of the contract; but silence, delay, or the failure to give immediate notice of his choice to refuse is a choice to perform and obligates him to comply with the contract. At 8 L. R. A. (N. S.) 1110, the following appears in the note: "The rule stated in the case in hand, requiring a vendee under a continuing contract to give immediate notice of his intention to terminate the contract because of a breach as to preceding deliveries, is apparently resultant from the well-established doctrine that a party seeking to rescind a contract because of defective performance by the other party must act promptly, and that such defects are deemed waived when objection is not made within a reasonable time. In Norrington v. Wright, 115 U. S. 188, 6 Sup. Ct. 12, 29 L. Ed. 366, in holding that the purchaser of a quantity of iron rails, to be shipped in certain proportions monthly, was justified in rescinding the whole contract because of the vendor’s failure to ship the required number of tons in the first two installments, the court attached the proviso that the right of rescission must be distinctly and seasonably asserted; and it was further held that there was a seasonable, assertion of the right where notice of rescission was given as soon as the purchaser knew that the quantities theretofore received were less than the contract called for. In Clark v. Wheeling Steel Works, 3 C. C. A. 600; 3 U. S. App. 358, 53 Fed. 494, an instruction that any right which the purchaser might have had to rescind a contract for the purchase of a quantity of. steel slabs and billets, to be delivered in fixed installments, on account of defects in earlier installments, was lost if the jury should find that there was an unreasonable delay in asserting it, was approved. * * * In Johnson v. Allen, 78 Ala. 387, 56 Am. Rep. 34, it was said that the delivery of only a part of the quantity ordered, or a failure to deliver any part of it, does not terminate a contract for successive deliveries, unless the purchaser sees proper so to treat and regard it. In Miller v. Moore, 83 Ga. 684, 10 S. E. 360, 6 L. R. A. 374, 20 Am. St. Rep. 329, it was held that a defect of quality in certain carloads of grain, which were accepted and paid for, would not justify the purchaser of a number of cars of grain in bulk in rejecting other carloads subsequently tendered which were according to contract, where neither of the parties elected or intended to rescind or abandon the contract in whole or in part, and that such party might be held liable for the damages resulting from his failure to accept. In Guernsey v. West Coast Lumber Co., 87 Cal. 249, 25 Pac. 414, it was held that where the purchaser accepted and paid for lumber delivered under a continuing contract to buy all the lumber of good merchantable quality which should be manufactured at a certain mill, without reserving the right to object to it subsequently, any ground of objection to it which might have existed would not justify a refusal to accept subsequent lumber which was in accordance with the contract. In Moran v. Wagner, 28 App. D. C. 317, it was held that the proviso that a purchaser must act with due diligence is attached to his right to rescind a contract for the sale and purchase of a quantity of oats, to be shipped from time to time, because a shipment was not of the specified quality. In McFadden v. Wetherbee, 63 Mich. 390, 29 N. W. 881, it was held that defects in wooden blocks, delivered under a continuing contract, which were accepted and paid for, although complaint was made of their being defective, will not authorize the rejection and nonacceptance of blocks thereafter to be delivered under the contract, without a showing that the blocks so to be delivered were also defective. In United States Iron Co. v. Sloss-Sheffield Co., 71 N. J. Law, 1, 58 Atl. 173, it was said, obiter, that a single shortage in a delivery under a contract cannot be taken advantage of. by a purchaser as a ground for terminating the contract after acceptance of subsequent shipments of the quantity called for by the contract. In Morgan v. McKee, 77 Pa. 228, it was held that, where the vendor’s failure to make one of the deliveries called for by the contract gives the vendee the right to rescind, such right must be exercised without unreasonable delay, and that, where notice of intention to rescind was not given until the next delivery was due and tendered by the vendor, the delay was unreasonable, and should be construed as an election to treat the contract as still subsisting. And in Scott v. Kittanning Coal Co., 89 Pa. 231, 33 Am. Rep. 753, it was held that, where a purchaser did not inform the vendor that he would receive no more coal because previous deliveries were of an inferior quality, a failure to give orders for delivery of the balance under the contract rendered the purchaser liable in an action for damages for breach of contract.”

Respondent has cited cases holding that whether there was a waiver is a question of fact for the jury; but where the circumstances are admitted, or clearly established, waiver becomes a question of law. (29 Am. & Eng. Ency. Law, 1108.)

In the brief, strong argument is made that the damages are excessive; but we do not understand that the appellant is seriously objecting to the final calculations made by respondent at the close of the argument, which show that the respondent sustained damage by failure to have the ties delivered as provided in the contract and incidental loss to the woodyards, which had been equipped for sawing and handling ties, at least to the amount of the verdict. In these calculations respondent charges for 108,345 ties which had been counted, and deducts and allows the appellant 16,345 ties in platforms, buildings, bunkers, and sidings, and in addition in one calculation allows appellant’s claim of one-quarter of the remaining 92,000 ties as being under the main track, and in another calculation allows to appellant 10 per cent of the remaining 92,000 ties as being under the main track, according to the testimony of the witness White.

In two respects these calculations are too liberal to appellant, for, as we have seen, the appellant was entitled to retain only the narrow-gage ties which remained in the track, and the contract did not reserve to the appellant any which were put in the platforms, buildings, or bunk-. ers after it was executed, and the respondent was entitled to these or to their value for mining timbers and wood, less 18 cents, the price which he was to pay for them, and because most of the ties allowed to the appellant as being under the track, according to the witness White, or a large part of them in the estimate allowing one-quarter, as claimed by the appellant, were in the sidings, which had already been allowed to the appellant once in the deduction of 16,345 for the platforms, buildings, bunkers, and sidings. In this way the appellant was allowed in the calculations the benefit, not only once, but twice, of a considerable number of ties to which it was not entitled at all, and consequently the evidence would support even a larger verdict. A discrepancy in the amount claimed by appellant for ties delivered to Henningsen seems to arise from charging him with 36,337 ties, when he had given the appellant credit for that number, but had charged back to the appellant 10,270 of these as being received by the Tonopah Mining Company and never going to Henningsen.

Appellant is contending, on various grounds, that if any agreement was made, as testified to by Henningsen, that after he went to the Tonopah Mining Company to sell ties, Tripp told him that there had been a misunderstanding, that the mining company had placed an order for ties before the signing of the contract, and that Henningsen and Tripp finally agreed that ties which were taken to the mining company were to be delivered, and that Henningsen was to be allowed 25 cents apiece, and that appellant had settled with him for these at that price, it cannot be enforced. And appellant is also claiming that this agreement is so binding that the respondent had no right to raise the price to 50 cents by serving the notice that he would charge that amount for them after a specified date.

Respondent contends that no proper exception was taken in the district court in relation to this agreement. The contentions of counsel in regard to it relate principally to the question, which we have held need not be determined, as to whether Henningsen was owing the company at the time it sought to have the contract forfeited. Under the circumstances, this ageeement was favorable to the appellant, for it reduces Henningsen’s claim on the ties used under it for timbers by the mining company to 25 cents, a. net profit of 7 cents to him, when the evidence indicates that these ties were worth 45 or 50 cents apiece, or that, if there had been no agreement to deliver them to the mining company for 25 cents, they would have yielded a profit of about 32 cents to He'nningsen, if they had been delivered to him in compliance with the original contract. If the agreement was effective, it related to ties which had been ordered by the mining company, or were in course of delivery at the time it was made, and to ties delivered to the mining company later, and before there was any notice of an advance in price.

It does not appear that beyond these the agreement designated any further number of ties to be delivered at that price to the mining company, so that Henningsen would have been precluded from enforcing a charge of 50 cents after notice, if he were really damaged to that extent. After the sale of the narrow-gage ties to Henningsen under'the original contract, and the making of the agreement between him and Tripp, if one was made, by which Henningsen was to receive 25 cents for the ties which had been ordered by the mining company, it was not incumbent on Henningsen to let the mining company have ties at that price without limit as to time or number, when no definite number or period to cover further orders from or deliveries to the mining company had been agreed upon.

Exception is taken to several instructions, which need not be reviewed in detail, because the controlling facts are admitted, and error in these, if any, could not have prejudiced the appellant or changed the result. We consider only one, as being illustrative of the bearing these instructions have. If it be conceded that, as claimed, it was error for the court to instruct the jury that "it was their duty to distrust, ” instead of that " they were at liberty to distrust,” the entire evidence of any witness who had wilfully sworn falsely to any material matter, and that the jury applied this instruction to the witness or testimony introduced on behalf of appellant, this would not have resulted in a more favorable verdict to the company, when the material facts are admitted, excepting possibly that one relating to the 25-cent contract, in regard to which, if the jury did not believe the testimony of the appellant, their conclusion would be less favorable to the appellant, because under the other admitted facts Henningsen would be entitled to more, or about 50 cents apiece, less the contract price of 18 cents, for the ties used by the mining company, or their value as mining timbers, instead of to the reduced amount of 25 cents, less 18 cents, according to the agreement to which he testified.

Under the views we have expressed, it is not necessary to determine whether the contract is an executory one, as claimed. Nor need we consider whether Henningsen refused to make payment for ties after demand, when he believed the appellant was owing him for the construction of an auto house which had in fact been built by a separate company operating on the appellant’s track, for, by accepting belated payments and continuing to make deliveries, the company had waived the right to cancel the contract without giving notice that prompt payment would thereafter be exacted in accordance with its terms.

The judgment of the district court is affirmed.

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Dissenting Opinion

Norcross, J.,

dissenting:

This case presents a number of serious and difficult questions of law. As some doubt exists in my mind as to the correctness of the decision rendered, I favor a rehearing, and for that reason dissent from the order denying the same.

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Rehearing

On Petition for Rehearing

By the Court,

Sweeney, C. J.:

The petition for rehearing in the within-entitled case is herewith denied.

Talbot, J., I concur.