Case Name: D. P. Gibbons vs. Ole O. Bente
Court: Minnesota Supreme Court
Jurisdiction: Minnesota
Decision Date: 1892-02-23
Citations: 51 Minn. 499
Docket Number: 
Parties: D. P. Gibbons vs. Ole O. Bente.
Judges: (tileillan, C. J., absent, (sick,) took no part.
Reporter: Minnesota Reports
Volume: 51
Pages: 499–511

Head Matter:
D. P. Gibbons vs. Ole O. Bente.
Argued by appellant, submitted on briefs by respondent, Jan. 13, 1892.
Decided Feb. 23, 1892.
Hight to Arrest Performance of Executory Contract — Damages.
Where a contract is executory, one party has the power to stop performance on the other side by an explicit direction to that effect, subjecting himself to such damages as will compensate the other party foi being stopped in the performance of his part at that stage in the execution of the compact. The party thus forbidden to proceed cannot afterwards go on, complete the contract, and recover the contract price, as such; his only remedy being for damages for breach of contract.
ON REHEARING.
Argued Nov. I, 1892. Decided Dec. 8, 1892.
Contract Construed — The Liability Several.
On reargument. The contract referred to in the original opinion construed, and held to create a several liability on the part of eacli subscriber to the amount of his subscription only.
Same — In other Respects the Contract was Joint.
Held, further, that in other respects the interests of the subscribers-were joint, and that all must unite in order to repudiate and renounce-the contract.
Question Erroneously Taken from the Jury.
Held, also, that the trial court erred in not submitting to the jury the-question as to fraudulent representation and concealment made in order to obtain the defendant’s signature to the instrument.
Appeal by defendant, Ole O. Bente, from an order of the District. Court of Stearns County, Searle, J., made August 24, 1891, denying a new trial.
The plaintiff, D. F. Gibbons, brought this action to recover of defendant $1.00 and interest. The complaint stated that D. J. Davis and Thomas Rankin on September 17, 1890, at Brooten, Minnesota,, agreed to build at that place in ninety days or thereabout a combined creamery and cheese factory for defendant and others, and that in consideration thereof defendant agreed to pay them $100,. one-third in cash, one-third in sixty days and the residue in four months after its completion. That Davis & Rankin- performed on their part prior to November 1, 1890, and assigned their claim to-plaintiff, and that defendant failed to pay the $100, or any of it.. A copy of the contract was attached to the complaint.'
The defendant answered that he was a Norwegian, unable to read' English; that plaintiff, as agent of Davis & Rankin, procured his-subscription to thé contract by representing that it'was only an agreement to take $100 stock in a corporation to be organized, and that the stockholders would determine at a meeting whether they would build a creamery; that he attended the meeting of the subscribers, and it was there resolved and decided by a majority, not. to incorporate or build a creamery; that plaintiff was present and. had notice of the decision; that defendant then and there refused to perform the contract on his part and notified plaintiff. The defendant also answered that he was not severally liable upon the contract, and that the other subscribers were necessary parties.
The action was tried June 22, 1891. The court instructed the jury to return a verdict for plaintiff for $108.95. Defendant excepted and moved for a new trial, but was refused. The following is a copy of the contract, viz.:
“We, Davis & Rankin, party of the first part, agree with the undersigned subscribers hereto, party of the second part, to build, erect, complete and equip for said party of the second part, a combined butter and cheese factory, at or near Brooten, Stearns county, Minn., as follows, to wit, (describing it and the machinery.)
“The parties of the second part hereby agree to furnish suitable lands for said buildings, together with sufficient water on said lot for the use of the business, and they shall be credited therefor, as a payment on this contract, the sum of $200; and it is further understood that in case the said second party shall fail to furnish said land and water within ten days after the execution of this contract, then the said Davis & Rankin at their option may furnish said land and water.
“Davis & Rankin further agree to provide and keep hired, at the expense of the stockholders, an experienced butter and cheese maker for one year, if desired.
“Said Davis & Rankin agree to erect said, butter and cheese factory as set forth by the above specifications for $6,500, payable in cash, one-third when completed and one-third in sixty days, and one-third in four months after completion.
“We, the subscribers hereto, agree to pay the above amount for said butter and cheese factory, when completed. Said building to be completed within ninety days or thereabout after the above amount ($6,500) is subscribed. All subscriptions to this contract to bear, interest at the rate of eight per cent, per annum from date of completion until paid.
“As soon as the above amount of $6,500 is subscribed, or in a reasonable time thereafter, the said subscribers agree to incorporate under the laws of the state, as therein provided, fixing the aggregate amount of stock at not less than $6,500, to be divided into shares of $100 each. Said share or shares as above stated to be issued to the subscribers hereto in proportion to their paid up interest herein.
“It is further distinctly understood by and between the parties hereto that if the subscriptions hereto shall amount to more than $6,500 and less than $7,000 then the foregoing agreement, designated as ‘Contract B,’ shall constitute the agreement between the parties.
. “For the faithful and full performance of our respective parts of the above contract, we bind ourselves, our heirs, executors, administrators and assigns. Executed and dated this 17th day of Sept., 1890.”
T. T. Ofsthun, D. G. Van Gamp and Jenkins & Treat, for appellant.
The defendant alleged in abatement of the action that if liable at all, he is only liable jointly with other subscribers. The evidence in support of this issue is the contract itself, which says: “We, the subscribers hereto, agree to pay the above amount ($6,500) for said butter and cheese factory when completed.”
There was evidence sufficient to go the jury on the question of fraud in obtaining defendant’s signature to the contract, and the court erred in taking this question from the jury and directing a verdict for plaintiff.
At the meeting at Brooten, plaintiff being present and participating, it was determined not to incorporate and not to have the creamery built. This was an abandonment of the contract on the part of the farmers, and thereafter Davis & Bankin had no right to proceed with the construction of the creamery and recover the contract price. They could only recover such damages as occurred to them by reason of this breach of the contract; which would be their net profits on the construction of the creamery and not the contract price. Davis v. Bronson, 2 N. Dak. 300.
D. Wilcox and Taylor, Calhoun & Rhodes, for respondent.
There wa3 no evidence tending to prove fraud on the part of plaintiff or of Davis & Bankin, and for that reason the court directed a verdict for plaintiff. If there was any' testimony reasonably tending to prove the fraud alleged in obtaining defendant’s name upon this contract such instruction was erroneous. We insist that the testimony nowhere shows a statement made by plaintiff as to the contract signed by defendant that was not in all respects true. Davis & Eankin had contracted with all the subscribers, sixty-seven in number, to build the creamery. Less than a majority voted to rescind, Davis & Eankin were bound to perform their contract. They had no option. A part of the subscribers could not release them. The meeting at Brooten did not release any one from his contract.
Plaintiff insists that the contract is several. The fact that each subscriber states after his name the amount of his subscription, and that after incorporation he is to have stock in proportion to the amount of his subscription, shows that the interest of each subscriber is to be in severalty; and it follows that the intention was that his liability should be several and not joint. When the object to be accomplished and the means taken to accomplish it, are considered in connection with surrounding facts, there can be no doubt that no one intended that one person should be liable for the whole amount. A contract for this same purpose, in identically this same form, was considered and construed by the Supreme Court of Wisconsin in Gibbons v. Grinsel, 79 Wis. 365; Davis v. Belford, 70 Mich. 120; Frost v. Williams, 1 S. Dak.--; Landwerlen v. Wheeler, 106 Ind. 523.
It is claimed that one party to a contract can repudiate it and thereby prevent performance. But in the case at bar the party supposed to have repudiated the contract, consisted of sixty-seven persons, and only twenty-seven or twenty-eight united in the repudiation. Defendant claims that less than a majority of the whole can repudiate the contract, and as a necessary consequence that their action can create a liability for damages as against the whole.
When several are joint parties, the only theory on which the act of one can be held to bind the others is that of agency. That by associating themselves together each clothes each of the others with the power to act for him and bind him by such acts. The case of Davis v. Bronson, 2 N. Dak. 300, assumes that any one can act for the whole to the extent of repudiating the contract, and that all are bound by and responsible for such'repudiation.
No such authority or agency exists, or can be implied from the joint contract, as will authorize one to act for and bind the others, so as to alter, renew or extend their liability. Where the relation is merely that of joint debtor, neither is the agent of the other to make a new contract with the creditor. Willoughby v. Irish, 35 Minn. 63; Van Keuren v. Parmelee, 2 N. Y. 523; Bell v. Morrison, 1 Pet. 351; Thompson v. Bowman, 6 Wall. 316; Lewis v. Woodworth, 2 N. Y. 512; Shoemaker v. Benedict, 11 N. Y. 176; Wallis v. Randall, 81 N. Y. 164; Thompson v. Richards, 14 Mich. 172.
Each of the subscribers has contracted with the others to accomplish the common purpose, and can compel the performance of the contract to the extent necessary to protect himself from any other or different liability than that which he voluntarily assumed. Zabriskie v. Hackensack & N. Y. R. Co., 18 N. J Eq. 184; Erwin v. Oregon Ry. é Nav. Co., 27 Eed. Eep. 625; Brewer v.- Boston Theatre, 104 Mass. 378; Clearwater v. Meredith, 1 Wall. 25; Henry v. Dietrich, 84 Pa. St. 286.

Opinion:
Collins, J.
The contract out of which this litigation arises was an executory one, entered into by Davis & Eankin, of the first part, (by plaintiff, who was then their agent, and has succeeded to their rights under the contract by assignment,) and defendant, with some sixty other persons, as parties of the second part. In it the parties of the first part agreed to erect and complete a butter and cheese factory for those of the second part within ninety days after the amount of the contract price had been obtained by subscription, — the scheme being to secure subscribers to the stock of a corporation in shares of $ 100 each; and the parties of the second part agreed to pay the contract price in three installments, commencing upon the completion. The defendant subscribed for one share, and is sued for the sum of $100. Without stopping to consider other points referred to by counsel for appellant, we proceed to an examination of one which goes directly to respondent's right to maintain an action for any part of the contract price, as such, although the factory has been completed in accordance with the terms of the contract. It was undisputed that soon after it was entered into, but before Davis & Bankin had commenced to perform, a meeting of those who had signed as parties of the second part was held. The plaintiff attended and participated. At this meeting a large majority of those present — defendant being of the number — voted and determined that they would go no further in the enterprise, and that the factory should not be built.
The plaintiff was then and there notified not to erect the factory, and to proceed no further under the contract. He responded in somewhat vigorous language, and declared that the factory should be erected inside of two weeks. As agent of Davis & Bankin, he then proceeded to erect and equip the plant. Defendant and others refused to accept it when completed, or to pay. The question is as to the power of the parties of the second part to repudiate and arbitrarily break their contract, by refusing to perform, and by renouncing all liability under it, and thereby prevent Davis & Bankin from recovering the full contract price, should they disregard the breach and fully perform on their part. There seems to be no room for doubt upon this subject.
While a contract is executory a party has the power to stop performance on the other side by an explicit direction to that effect, subjecting himself to such damages as will compensate the other party for being stopped in the performance on his part at that stage in the execution of the contract. The party thus forbidden cannot afterwards go' on, and thereby increase the damages, and then recover such damages of the other party. Danforth v. Walker, 37 Vt. 239; Clark v. Marsiglia, 1 Denio, 317; Butler v. Butler, 77 N. Y. 472; Collins v. Delaporte, 115 Mass. 159.
The question is very fully considered in the recent ease of Davis v. Bronson, 2 N. Dak. 300, (50 N. W. Rep. 836,) in which cases other than those above noted are referred to.
The legal right, on general principles, of either party, to violate, abandon, or renounce his contract, on the usual terms of compensation to the other for the damages which the law recognizes and allows, — subject to the jurisdiction of equity to decree specific performance in proper cases, — is universally recognized and acted upon. Among the many authorities which might be cited on this, see Bish. Cont. § 837; Leake, Cont. 868, 1044; 1 Suth. Dam. 113; 2 Suth. Dam. 193, 526; Hinckley v. Pittsburgh Bessemer Steel Co., 121 U. S. 264; American Life Insurance Co. v. McAden, 109 Pa. St. 399, (1 Atl. Rep. 256;) Frost v. Knight, L. R. 7 Exch. 112; Roper v. Johnson, L. R. 8 C. P. 167; Laird v. Pim, 7 Mees. & W. 474; Hochster v. De la Tour, 2 El. & Bl. 678.
Prom an examination of the adjudged cases just cited, it will be seen that ordinarily the party who is willing to abide by an executory contract may treat it as subsisting up to the time when performance should commence, for the purpose of insisting that the other party, who has previously repudiated it, shall then and finally determine whether he will comply with its terms, or persist in his resolution not to perform upon his part. But the party who has not broken his compact is not allowed to treat it as in force, for the purpose of performing in direct opposition to the refusal of the other to abide by its terms, and then enforce the payment of the contract price. One reason for this is found in the general rule that a person who has been injured by a breach of contract must put forth reasonable exertion to render the injury as light as possible. He cannot negligently or willfully allow the damages to be unnecessarily enhanced; or, if' he does, the increased loss falls upon him.
Order reversed.
(tileillan, C. J., absent, (sick,) took no part.