Case Name: W. D. GILE v. INTERSTATE MOTOR CAR COMPANY, a Corporation
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1914-02-13
Citations: 27 N.D. 108
Docket Number: 
Parties: W. D. GILE v. INTERSTATE MOTOR CAR COMPANY, a Corporation.
Judges: Burice, J. I concur in the foregoing dissent.
Reporter: North Dakota Reports
Volume: 27
Pages: 108–140

Head Matter:
W. D. GILE v. INTERSTATE MOTOR CAR COMPANY, a Corporation.
(— L.R.A. (N.S.) —,
145 N. W. 732.)
Contract — sale of automobiles — specified territory — specified time — specified price — deposit money — failure to perform — action to recover deposit money — right denied.
1. Defendant, a distributer of Interstate automobiles for the state of North Dakota, entered into a written contract with plaintiff by which the latter agreed to purchase and pay for at least 50 cars at specified dates during the life of the contract, and to deposit with defendant the sum of $1,250, being $25, on each car, to be applied by defendant on the purchase price of each when sold. In consideration thereof defendant allotted to plaintiff during the life of the contract, nearly one year, the exclusive right to solicit purchasers of and to sell such cars in ten designated counties of the state, and obligated itself to furnish cars to plaintiff, when ordered, at certain specified discounts from list prices. Plaintiff promised to diligently and faithfully advertise such ears in and to work such territory during the life of such contract, and to do certain other things tending to promote and to effectuate the. objects of the contract. Plaintiff advanced to defendant the deposit aforesaid, and entered upon the performance of the agreement. During the entire life of the contract both parties, in good faith, attempted to fulfil the same. Defendant was ready, able, and willing to perform on its part, but plaintiff did not succeed in making any sales during the entire period, and as a consequence was unable to and did not take and pay for any of such cars. Shortly after the termination of such contract by lapse of the period designated therein for its existence, plaintiff brought this action to recover such deposit as for money had and received by defendant to his use, claiming a right to the repayment thereof upon the ground that the consideration had wholly failed.
Held, for reasons stated in the opinion, that he cannot recover.
Implied promise — repayment — equity — good conscience.
2. In order to maintain such action it is incumbent on plaintiff to establish facts from which the law raises an implied promise on defendant’s part to repay such money, and such a promise will never be implied except where it appears that in equity and good conscience defendant ought not to be permitted to retain the same.
■Contract — mutuality — executory — rights of parties — measured toy the contract.
3. Whether the contract lacked mutuality and was therefore voidable and unenforceable while it remained wholly executory is not controlling. The contract was not illegal or unlawful, and the parties having acted under it during the entire period of its existence, it cannot, so far as executed, be questioned, and it must, to such extent, control and measure the rights of the respective parties.
Stipulation — contract — liquidated damages — not a penalty — valid.
4. The stipulation in the contract authorizing the retention by defendant of such deposit as liquidated damages for plaintiff’s breach thereof, held, not in the nature of a penalty, because from the nature of the case it would be extremely difficult, if not impossible, to fix the actual damages.
Breach of contract — performancedeposit — money had and received.
5. Plaintiff having breached the contract while defendant performed the same, as far as plaintiff permitted it to do so, the former cannot recover such deposit as for money had and received.
Damages — defense — want of equity.
6. Defendant, by his answer and proof, did not seek to recover damages against the plaintiff under the contract, but he merely plead and proved such actual damages as far as they were susceptible of proof, as defensive matter tending to show a want of equity in plaintiff’s claim.
Opinion filed February 13, 1914.
Appeal from District Court, Nelson County, O. F. Templeton, J*
From an order granting a new trial, defendant appeals.
Reversed.
Scott Bex, for appellant.
The action for money had and received only lies in those cases where the defendant has received money, or its equivalent which in equity and good conscience belongs to the plaintiff. Krump v. First State Bank, 8 N. D. 75, 76 N. "W. 995; Logan v. Freerks, 14 N. D. 127, 103 N. W. 426; Martin ,v. Toyer, 19 N. D. 504, 125 N. W. 1027; Siems v. Pierre Sav. Bank, 7' S.. D. 338, 64 N. W. 167; 15 Am. & Eng. Enc. Law, 1096; 27 Cyc. 849.
Money paid in the fulfilment of a valid contract cannot be recovered back unless the contract has been rescinded by consent, or by failure of defendant to perform. 30 Cyc. 1322; Chemical Nat. Bank v. World’s Columbian Exposition, 170 111. 82, 48 N. E. 331; Fox v. Monahan, 8 Cal. App. 707, 97 Pac. 765; Todd v. Bettingen, 109 Minn. 493, — L.R.A.(N.S.) —, 124 N. W. 443; Moses v. MacFerlan, 2 Burr. 1005, 1 W. Bl. 219; Slevin v. Police Fund Comrs. 123 Cal. 130, 44 L.R.A. 114, 55 Pac. 785.
A party who has breached the contract has no right to recover back the payments made by him. Clark v. American Development & Min. Co. 28 Mont. 468, 72 Pac. 978; Arnett v. Smith, 11 N. D. 55, 88 N. W. 1037; Way v. Johnson, 5 S. D. 237, 58 N. W. 552; Maloy v. Muir, 62 Neb. 80, 86 N. W. 916; York v. Washburn, 118 Fed. 316; Warvelle, Vend. & P. § 926; McKinney v. Harvie, 38 Minn. 18, 8 Am. St. Rep. 640, 35 N. W. 668; Downey v. Riggs, 102 Iowa, 88, 70 N. W. 1091; McManus v. Blackmarr, 47 Minn. 331, 50 N. W. 230; Lawrence v. Miller, 86 N. Y. 131; TIanschka v. Vodopich, 20 S. D. 551, 108 N. W. 28; Thomas v. MeCue, 19 AVash. 287, 53 Pac. 161; Chemical Nat. Bank v. World’s Columbian Exposition, 170 111. 82, 48 N. E. 331.
The contract in question is an executory one for the purchase of cars. Defendant never at any time sold plaintiff any cars. Defendant was at no time in default. Bell v. Hatfield, 121 Ky. 560, 89 S. AV. 544, 2 L.R.A.(N.S.) 529, and case note; Krebs Hop Co. v. Livesley, 55 Or. 227, 104 Pac. 3; 35 Cyc. 584.
The seller of goods is entitled to-such damages as will put him in the
same position as though he had been permitted to complete the contract, which usually is the difference between the contract price and what it would have cost him to perform. American Contr. Co. v. Bullen Bridge Co. 29 Or. 549, 46 Pac. 138; Boehm v. Horst, 178 H. S. 1, 44 L. ed. 953, 20 Sup. Ct. Bep. 780; Canfield v. Orange, 13 N. D. 622, 102 N. W. 313; Young v. Metcalf Land Co. 18 N. D. 441, 122 N. W. 1101.
Where the sum stipulated in the contract as damages is less than the actual damages, it cannot be held to be a penalty. Krausse v. Greenfield, 61 Or. 502, 123 Pac. 392.
Losses which are the necessary and ultimate result of plaintiff’s breach of the contract are proper elements of general damages, and need not be specially pleaded. 13 Oyc. 175; 5 Enc. PI. & Pr. 740.
Assuming that the original answer was defective, it would have been an abuse of discretion had the court refused to permit the amendment offered. Martin v. Luger Eurniture Co. 8 N. D. 220, 77 N. W. 1003; Welch v. Northern P. B. Co. 14 N. L>. 19, 103 N. W. 396; Kerr v. Grand Porks, 15 N. H. 294, 107 N. W. 197; Webb v. Wegley, 19 N. L>. 606, 125 N. W. 562.
Frich & Kelly, for respondent.
The contract involved in this case is a conditional sale. Poirier Mfg. Co. v. Kitts, 18 N. E>. 557, 120 N. W. 558; Morrison Mfg. Co. v. Eargo Storage & Transfer Co. 16 N. E. 256, 113 N. W. 605.
After September 1, 1911, respondent could not require delivery of the cars under the contract, nor could appellant make delivery and compel acceptance and payment. Norrington v. Wright, 115 U. S. 188, 29 L. ed. 366, 6 Sup. Ct. Bep. 12; Sweetzer v. Mellick, 4 Idaho, 201, 38 Pac. 403.
The action for money had and received is equitable in its nature. It does not depend on an express promise, but on the fact of the receipt of the money by one from another, through oppression, imposition, extortion, or deceit, mistake of fact, or without consideration, or on a consideration that has failed, and from which the law implies a promise to repay. Ashton v. Shepherd, 120 Ind. 69, 22 N. E. 98; Bichter v. Hnion Land & Stock Co. 129 Cal. 367, 62 Pac. 39; Tilford v. Boberts, 8 Ind. 254; Davis v. Marston, 5 Mass. 199; Dill v. Ware-ham, 7 Met. 438; Morrison v. Larrison, 1 Marv. (Del.) 211, 40 Atl. 1107; Eield v. Banks, 177 Mass. 36, 58 N. E. 155; Hicks v. Steel, 126 Mich. 408, 85 N. W. 1121; Luce v. New Orange Industrial Asso. 68 N. J. L. 31, 52 Atl. 306; Bier v. Bash, 186 N. Y. 565, 79 N. E. 1101; Randlet v. Ilerren, 20 N. H. 102; Warder, B. & G. Go. v. Myers, 70 Neb. 15, 96 N. W. 992; Nollman v. Evenson, 5 N. D. 344, 65 N. W. 686; Dring v. St. Lawrence Twp. 23 S. D. 624, 122 N. W. 664; Scheer v. Clinton Falls Nursery Co. 20 N. D. 1, 124 N. W. 1115.
No objection to the form of this action was made in the lower court. Mahon v. Fansett, 17 N. D. 104, 115 N. W. 79; Northern Shoe Co. v. Cecka, 22 N. D. 631, 135 N. W. 177.
The deposit was merely as security for the performance of the contract, — that the purchaser would make diligent efforts to canvass the territory and sell the cars. Carson v. Arvantes, 10 Colo. App. 382, 50 Pac. 1080, 27 Colo. 77, 59 Pac. 737; 1 Sedgw. Damages, 410; Traub-Dittmar Constr. Co. v. Hartman, 61 Misc. 173, 112 N. Y. Supp. 919, 133 App. Div. 889, 117 N. Y. Supp. 1149; Home Land & Cattle Co. v. McNamara, 49 O. C. A. 642, 111 Fed. 822; Drew v. Pedlar, 87 Cal. 443, 22 Am. St. Rep. 257, 25 Pac. 749.
Actual damages in this case, if any existed, were not difficult to fix, and this issue does not come under § 5370, Revised Codes 1905. Pacific Factor Co. v. Adler, 90 Cal. 110, 25 Am. St. Rep. 102, 27 Pac. 36; Seim v. Krause, 13 S. D. 530, 83 N. W. 583; Mansur-Tebbetts Implement Co. v. Willet, 10 Okla. 383, 61 Pac. 1066; Condon v. Kemper, 47 Kan. 126, 13 L.R.A. 671, 27 Pac. 829; Wilkes v. Bierne, 68 W. Va. 82, 31 L.R.A.(N.S.) 937, 69 S. E. 366; Squires v. Elwood, 33 Neb. 126, 49 N. W. 939; J. I. Case Threshing Mach. Co. v. Frank, 105 Minn. 39, 117 N. W. 229.
The appellant by his amended answer recognizes the contract as a sale, and has made an election of his remedy, and is bound by it. Tiedeman, Sales, §§ 331, et seq.; Blackburn, Sales, chap. Ill, ** 445, et seq.; 35 Cyc. title “Sales” subd. VIII, Remedies of Seller.
Appellant has suffered no actual damages and has no claim on the deposit money. McCormick Harvesting Mach. Co. v. Balfany, 78 Minn. 370, 79 Am. St. Rep. 393, 81 N. W. 10; Mead v. Rat Portage Lumber Co. 93 Minn. 343, 101 N. W. 299; D. M. Osborne & Co. v. Martin, 4 S. D. 297, 56 N. W. 905; Morris v. Wibaux, 159 111. 627, 43 N. E. 837; Canham v. Plano Mfg. Co. 3 N. D. 229, 55 N. W. 583; 35 Cyc. 521.
The rule is the same where damages for breach, and not the price of the goods sold, are sought to be recovered by the seller. Thick v. Detroit, U. & Id. R. Co. 137 Mich. 708, 109 Am. St. Rep. 694, 101 N. W. 64; Norrington v. Wright, 115 IT. S. 188, 29 L. ed. 366, 6 Sup. Ct. Rep. 12; Sweetser v. Melliek, 4 Idaho, 201, 38 Pac. 403; Gardner v. Caylor, 24 Ind. App. 521, 56 N. E. 134; Offutt v. Wells, 42 Ala. 199; Newbery v. Furnival, 56 N. Y. 638; Neis v. Yocum, 9 Sawy. 24, 16 Fed. 168; Parish v. United States, 8 Wall. 489, 19 L. ed. 472; Smoot’s Case, 15 Wall. 36, 21 L. ed. 107; Ames v. Moir, 138 U. S. 306, 34 L. ed. 951, 11 Sup. Ct. Rep. 311; 35 Oyc. 534, and notes; Fountain City Drill Co. v. Lindquist, 22 S. D. 7, 114 N. W. 1098; Scheer v. Clinton Falls Nursery Co. 20 N. D. 1, 124 N. W. 1115.

Opinion:
Fisk, J.
On October 8, 1910, the parties entered into the following written agreement:
This agreement, made this 8th day of October, a. d. 1910, at Dakota, N. D., between the Interstate Motor Car Company, party of the first part (hereinafter known as the distributers), and W. D. Gile, party of the second part (hereinafter known as the dealer); witnesseth:
(1) That the distributers hereby grant unto said dealer the right to sell Interstate cars in the following described territory, to wit: Williams, McKenzie, Billings, Bowman, Burke, Montraile, Dunn, Stark, Hettinger, and Adams counties. (The Interstate Motor Car Company reserves the right to cancel any of the above counties if no agency appointed on or before June 1, 1911, by the dealer.)
(2) The distributers hereby agree to sell to the dealer Interstate cars with standard catalogue equipment at a discount of 20 per cent from list price thereof. The price of Interstate cars — in standard 'touring,' 'roadster,' or 'demi-tonneau' types, with full lamp equipment, magneto, horn, and tools, shall be $1,750 f.o.b. factory at Muncie, Indiana.
(3) The distributers reserve the right to change all prices and discounts mentioned in this contract, upon two weeks' notice in writing, duly mailed to the dealer.
(4) No order for automobiles, automobile parts, or attachments shall be binding upon said distributers unless said order shall clearly specify kinds and styles, dates of shipment, etc., and unless it is accepted by the distributer at least thirty days prior to date of delivery, and all such orders and acceptances shall be in writing and subject to delays caused by strikes, fires, or other causes beyond manufacturer's control.
(5) The failure of the distributers to enforce at any time any of the provisions of this agreement, or to exercise any option which is herein provided, or to require at any time performance by the dealer of any of the provisions hereof, shall in no way be construed to be a waiver thereof, nor in any way affect the validity of this contract or any part thereof, or the right of the distributers to hereafter enforce the same.
(6) The distributers shall not be liable for any failure of performance on its part when said failure of performance shall be due to fire, strike, insurrection, or any other cause beyond its control.
(7) It is expressly understood and agreed that the title to each and every automobile, and to all automobile parts furnished to said dealer, under the terms of this agreement, shall be and remain in the distributers' name until same is paid for in full, in cash.
(8) It is further agreed that the distributers shall not be liable to the dealer for any loss or damages to automobiles or other goods furnished under this contract, while the same are in the custody and possession of any railroad, express company, or other common carrier in transit.
(9) All claims on account of material must be made by the dealer within sixty days after the delivery of automobiles,.etc., to the dealer's customers, and upon any such material being submitted to the manufacturer properly tagged, giving the motor number of the automobile from which the same was taken, the name and address of the owner, and the date of sale when new, and the date when said part was taken from said automobile, or gratuitous exchange of part was made, and such other information as may from time to time be prescribed by the manufacturer; manufacturer agrees to replace such parts gratis, if, upon examination of the same it shall, in the opinion of the manufacturer, be found to be defective in workmanship and material; the freight or express charges on said part so returned to the manufacturer for credit or replacement must in all cases be prepaid by the dealer; and all claims on account of. defective tires, rims, coils, radiators, and other equipment not manufactured'by the Interstate Automobile Com pany, must be made by said dealer to the respective manufacturers of suck tires, rims, coils, radiators, and other equipment.
(10)The dealer hereby orders and agrees to take and pay for not less than 50 Interstate cars of the types and on the dates as hereinafter indicated.
Touring Car.
Jan. 1911 Three
Feb. 1911 Three
Mar. 1911 Three
Apr. 1911 Six
May 1911 Nine
June 1911 Twelve
July 1911 Eight
Sep. 1911
Oct. 1911
Nov. 1910 Three
Dec. 1910 Three
(11) The dealer has deposited with the distributers the sum of $1,-250 to apply at the rate of $25 per car on the cars ordered as above; said sum will be credited by the distributers to the dealer, and will be repaid as cars are delivered and paid for, at the same rate, except that any or all of said deposit may, at the option of the distributer, be credited ag'ainst any parts or open account due the distributers from the dealer, and the balance, if any, will be credited pro rwba,, on each car taken. The balance of the price of each, over and above the amount prepaid and credited against it as aforesaid, shall be paid at the time of shipment or on presentation of sight draft with bill of lading attached.
(12) The dealer further agrees:
(a) That he will maintain at all times the manufacturer's list price for automobiles and parts, and that he will not by rebates, allowances, donations, or by other means, evade the spirit of this clause.
(b) That at the end of each week the dealer will report to the distributers the names and addresses of all purchasers of Interstate cars, together with factory number of same.
(c) That he will faithfully represent and advertise such automobiles; make all reasonable efforts to promote and increase the sales thereof; keep in stock at least one of Interstate manufacture, for the sole purpose of demonstrating and exhibiting to prospective purchasers, and maintain the same in good order and repair.
(d) That he will respond promptly to all inquiries respecting the purchase of said automobiles; keep the distributers fully informed as to the number of inquiries for, and sales of automobiles within said territory, and any other matters affecting the interests of the distributers in connection with this agreement; sell all vehicles covered by this agreement and all their parts and attachments at the selling prices, according to lists thereof to be furnished by said distributers; that he will do nothing that will in any way infringe, impeach, or lessen the value of any of the patents under which the manufacturer makes such vehicles ; and will not sell nór offer for sale, directly or indirectly, any new automobiles or motor cars, except the following lines, the sale of which, by the dealer, is hereby approved by the distributers.
(g) That if this contract to take and pay for cars is unfulfilled by the dealer, the distributers may retain the amount of any deposits remaining to his credit, as liquidated damages for the breach thereof.
(h) That all parts ordered shall be shipped O. O. D.
(i) That he will not materially change any car manufactured by the manufacturer, nor assign this contract or any rights hereunder, without the written consent of the distributers.
(j) That he will not sell any new car manufactured.by the manufacturer of Interstate cars, or any parts or accessories thereof, in any territory other than that above described; except that, should any person or persons residing elsewhere come unsolicited to the dealer's place of business, sales may be made for the delivery of cars off the floor; provided, however, that should any reduction in price, rebate, donation in the form of freight charges, extra equipment, or other special inducement, expressed or implied, be offered to effect such sale, the same shall be construed as a violation of the spirit of this contract, and the distributers may, after hearing both sides, arbitrarily so decide and .require the dealer to pay the full or any part of the discount to the dealer in whose territory the buyer may have his legal residence.
(13) It is mutually understood and agreed:
(a) That this contract shall be interpreted and construed according to the laws of the state of North Dakota.
(b) That this contract shall expire by its own limitation on September 1, 1911, or may be canceled by either party upon thirty days' written notice, given to the other by registered letter, and such cancelation of this contract shall operate as a cancelation of all orders for automobiles, automobile parts, or attachments which may have been received from said dealer and which have not been shipped prior to the date when such cancelation takes effect, but shall not cancel any standing accounts for automobiles, parts, etc.
(e) That after the termination of this agreement for cause or as above prescribed, the continuance of the sale of such automobiles or the referring of inquiring by the distributers to the dealer, shall not be construed as a renewal of this agreement for any specified period of time, but all orders accepted by the distributers and all sales made by the dealer after such termination of this contract shall be governed by the terms and conditions thereof.
This agreement, to be valid, must bear the signatures of the president and secretary of the Interstate Motor Oar Company.
In witness whereof, the said parties hereto have signed this agreement the day and year first above written.
Interstate Motor Oar Co.,
(The Distributers.)
Geo. L. Barrett, President.
-, Secretary.
W. D. Gile
(The Dealer.)
Pursuant to the terms of such contract, plaintiff deposited with defendant the sum of $1,250. Whether such deposit was in cash or by the transfer to defendant of certain personal property is not here material. That the contract in this respect was complied with by plaintiff is conceded. It is also conceded that plaintiff during the entire life of such contract exercised, unmolested, the right conferred on him by such instrument of canvassing the territory therein, consisting of ten counties in the northwestern portion of this state, for prospective purchasers of Interstate cars, and that defendant in good faith lent him friendly assistance in such work. It is also undisputed that plaintiff failed to secure a single order, and that as a consequence he not only failed to order and pay for 50 cars which he agreed to do by the terms of such contract, bnt he did not order or pay for any of such cars whatever. It cannot be questioned but that such contract was fairly and in good faith entered into by both parties, and that they both in good faith endeavored to perform the same, also that the only breach thereof was occasioned by plaintiff's inability and failure (whether through incompetency or otherwise being immaterial) to find purchasers so as to enable him to order and pay for the 50 cars aforesaid. During the entire time in which such contract was in force, no attempt was made by either party to rescind, cancel, or treat the contract at an end for any reason whatsoever, both apparently treating the same as in all respects a valid and enforceable contract. The' evidence also tends to show that/.'during all such period of time defendant held itself ready, able, and willing to furnish such cars as plaintiff might order, upon the terms stated in the contract.
Shortly after the expiration of the contract, and on September 25, 1911, this action was commenced to recover, as the complaint alleges, as for money had and received, the sum of $1,000, being the amount claimed by plaintiff to have been deposited with defendant under such contract. Defendant answered, setting up the contract aforesaid, and alleging that the sum claimed in the complaint was deposited with it pursuant to such contract; alleging plaintiff's breach thereof and asserting its right to retain such deposit as liquidated damages pursuant to the terms of the agreement; and also alleging facts tending to show that, by plaintiff's breach, defendant suffered damages in a sum in excess of the amount of such deposit. Such answer also alleges by way of counterclaim a cause of action in its favor and against plaintiff upon a promissory note for $350 and interest, executed and delivered by defendant to plaintiff on October 8, 1910. At the conclusion of the testimony the trial court directed the jury to return a verdict in defendant's favor, both on the cause of action alleged in the complaint and on the defendant's counterclaim aforesaid. Thereafter the trial court granted plaintiff's motion for a new trial, and from the order defendant appeals. The sole error assigned is the granting of the new trial. The grounds for making such order appear in a memorandum decision set out in the abstract, and in substance are that error was committed in directing the verdict for defendant, because of lack of proof that defendant ever offered to deliver tbe cars to the plaintiff under the contract; the court saving: "If plaintiff had refused to accept the cars before time of delivery and acceptance had arrived, defendant 'would not be required to offer to perform as a prerequisite to relief by recovery of damages." The learned trial court evidently misconstrued defendant's answer wherein it alleged such damages merely as defensive matter, and not by way of counterclaim. Defendant did not seek to recover such damages under the contract on account of plaintiff's breach thereof, but it merely sought to plead and show such damages by way of defense. In other words, it was not incumbent on it to allege such matters at all, for the same or any other facts tending to show á want of equity in plaintiff's claim were provable under the denials in the answer. 27 Cyc. 881, and cases cited in note 16.
In Hawks v. Hawks, 124 Mass. 457, in speaking on this subject the court, among other things, said: "The general denial called on the plaintiff to prove not only the receipt of the money by the defendant, but that he received it under circumstances which gave the plaintiff a right to recover it. The defendant was entitled, under his answer, to establish any facts which would disprove the plaintiff's case. It was open to him to show that he did not receive the money, and that, if he did receive it, he was under no obligation to pay it to the plaintiff."
In the first opinion we reached a conclusion favorable to respondent. A rehearing was ordered, and the case has been reargued, and upon further consideration we feel constrained to depart from the views formerly expressed, and to now hold that the order granting such new trial was erroneous. The following reasons prompt us to arrive at this conclusion :
The action being for money had and received, it concededly follows that no recovery can be had by plaintiff without showing facts from which the law raises an implied promise on defendant's part to repay to plaintiff such deposit. In order to raise such an implied promise it is elementary that facts must be shown from which it is made to appear that, in equity and good conscience, defendant ought not to retain such deposit. Plaintiff has established such a showing, provided his promise be sound, that he has received no consideration for such deposit, or that such consideration has wholly failed. Numerous au thorities are cited by him where recoveries were sustained because of failure of consideration. Such authorities, no doubt, announce a correct rule, but are they applicable to the facts in the case at bar ? "We think not. It seems to be the contention of respondent's counsel that such contract merely amounts in substance and effect to an executory agreement for the purchase and sale of 50 automobiles, and that such deposit was exacted and paid as and for a part payment in advance on the purchase price, in the nature of a guaranty or earnest money for the faithful performance thereof by respondent, the same to be credited at the rate of $25 on each car when purchased, and that defendant breached such contract by failing to deliver or tender for delivery to. plaintiff, any of the cars. That as a consequence plaintiff received no consideration for the deposit, or that such consideration has wholly failed through the fault of defendant. The fallacy of such contention is made apparent from an inspection of the contract and a review of the evidence. "What, in brief, are the salient features of this contract ? In consideration of plaintiff's promise to purchase and pay for at least 50 Interstate cars at stated times, and to advance to defendant such deposit of $1,250, to be applied on the purchase price as above stated, defendant granted to plaintiff for a specified period of time the exclusive right to sell such cars in ten counties of the state, and obligated itself to furnish such cars as plaintiff might order at certain discounts from list prices. This, in the eye of the law, was a valuable right. That it ultimately proved to be valueless to him does not justify the claim that such right was of no value in the eye of the law. If plaintiff had been successful in securing purchasers of cars, such right or privilege might have resulted in great benefit and profit to him. He was not restricted to the sale of 50 cars. No limitation as to the number was stipulated. How, therefore, under any possible theory can he properly ignore this important provision of the contract, and successfully assert that the entire consideration for this advance payment or deposit has failed because no cars were in fact sold? Was not the grant of this large territory something of value which defendant parted with, and did not plaintiff, during the entire period, enjoy such right to the exclusion of defendant and others? That he did, must be conceded. Therefore, unless it can be said that defendant refused to carry out the contract in respect to furnishing cars when ordered, or in some other respect breached the contract on its part, how can a court say that in equity and good conscience defendant ought to repay such deposit? We assert, without the fear of successful contradiction, that no court ever held under such facts that an implied promise was created by law on defendant's part to make such repayment. It is only in cases where the contract has been breached by the vendor that the vendee has been held entitled to recover payments made on the purchase price, with the exception of cases involving facts and legal principles not present nor applicable in the case at bar. It cannot be denied that defendant, during the entire life of the contract, did everything it could reasonably be expected to do to carry out its provisions. On the contrary, the proof discloses that the plaintiff breached the contract by failing and neglecting to purchase 50 ears, or any cars, as he had promised and agreed to do. True, he in good faith attempted to fulfil the contract, and for some reason failed, but does this fact redound to his benefit by raising an equity in his favor? Are we to announce a precedent that he who enters into a losing bargain not induced by the fraud or the deceit of the other party, and who exercises rights conferred on him thereunder during the entire life of the contract, may thereafter successfully assert that in equity and good conscience he is entitled to a return of all that he parted with under the agreement ? Such a precedent would, we fear, stand alone in the jurisprudence of this country.
Nearly a century ago the supreme court of New York in the case of Ketchum v. Evertson, 13 Johns. 359, used the following language, the correctness of which has, we think, never been challenged:
"It may be asserted, with confidence, that a party who has advanced money, or done an act in part performance of an agreement, and then stops short, and refuses to proceed to the ultimate conclusion of the agreement, the other party being ready and willing to proceed and fulfil all his stipulations, according to the contract, has never been suffered to recover for what has been thus advanced or done. The plaintiffs are seeking to recover the money advanced on a contract, every part of which the defendant has performed, as far as he could by his own acts, when they have voluntarily and causelessly refused to proceed, and thus have, themselves, rescinded the contract. It would be an alarming doctrine, to hold that the plaintiff might violate the contract, and, be cause they chose to do so, make their own infraction of the agreement the basis of an action for money had and received. Every man who makes a bad bargain, and has advanced money upon it, would have the same right to recover it back that the plaintiff's have."
The same court in a recent case announced a rule which seems to be applicable on principle to the case at bar, although in that case it was alleged that the defendant wrongfully breached the contract. The facts were that plaintiff took out five policies of life insurance with the defendant company, and, after the policies had been in force for sometime, the defendant forfeited the same for nonpayment of a premium, and plaintiff asked to recover as for moneys had and received by defendant to plaintiff's use, all premiums paid by her on the policies. The court held she could not recover, saying, among other things: "The question which arose upon the motion of the defendant's counsel for dismissal of the complaint was solely with regard to the plaintiff's right to recover in assumpsit as for money had and received by the defendant to her use, the premiums paid, and we concur in the justice's decision that the plaintiff had mistaken her remedy. Granting that upon the defendant's breach the plaintiff could treat the contract, with regard to each of the policies, as determined, it does not follow that the defendant was bound, ex aequo et bono, to restore the premiums received by it, for which, in part at least, the plaintiff had had value in the risk assumed by the defendant. Plainly, the plaintiff could not predicate a rescission of the contract of the defendant's breach, without restitution by her of what she had received under the contract; and a contract of life insurance being essentially indivisible, in point of performance, by either of the parties thereto, . . . such restitution was, in the nature of things, impossible. . . . The case at bar should be distinguished from a case where the failure of consideration for the premiums paid is entire, in that the risk to be assumed by the insurer under the policy never attached; the policy being avoided for noncompliance with a condition precedent, fraud, or other causes." Skudera v. Metropolitan L. Ins. Co. 11 Misc. 367, 39 N. Y. Supp. 1059.
The contention that this deposit cannot be retained because the stipulation in the contract authorizing its retention is in the nature of a penalty, which the law abhors and the Code expressly prohibits,' is untenable for the reason that the actual damages caused by plaintiff's breach of the contract are not susceptible of proof, and consequently the contract comes within the exception provided for in § 5370, Revised Codes 1905, which provides: "The parties to a contract may agree therein upon an amount which shall be presumed to be the amount of damage." If, as respondent's counsel argue, the contract was one merely for the purchase and sale of 50 automobiles, their contention would have merit. But, as we have before stated, and as the instrument clearly provides, this is but one feature of the bargain. We are not at liberty to segregate this stipulation from the balance of the contract and say that it is the entire agreement. As a consideration for the exclusive right granted him to sell Interstate cars in these ten counties, and the defendant's undertaking to furnish cars as ordered at certain stipulated discounts from list prices, plaintiff agreed not only to purchase and pay for at least 50 cars, but he also agreed, among other things, to "faithfully represent and advertise such automobiles; make all reasonable efforts to promote and increase the sales thereof; keep in stock at least one of Interstate manufacture, for the sole purpose of demonstrating and exhibiting to prospective purchasers," etc. Clearly, therefore, it was within the contemplation of the parties that more than 50 cars might be placed in such territory by plaintiff under the contract, and, further, that defendant would or might derive benefits thereunder in addition to profits which it might make on sales of cars by plaintiff during the life of the contract. The parties, we think, had the right, therefore, to agree upon liquidated damages, for it is obvious that "from the nature of the case it would be impracticable or extremely difficult to fix the actual damage" caused' to defendant by a breach thereof. But in any event plaintiff is not entitled to recover such deposit, even if it be treated as a penalty instead of liquidated damages; for the proof shows that the actual damages suffered by defendant on account of plaintiff's failure to perform exceed the amount of such deposit. Krausse v. Greenfield, 61 Or. 502, 123 Pac. 392; Bilz v. Powers, 50 Colo. 482, 38 L.R.A.(N.S.) 847, 117 Pac. 344.
This brings us back to the original question as to whether the stipulated consideration going to plaintiff has failed. Just how and in what manner it has failed we are wholly at a loss to comprehend. Plaintiff, as before stated, operated under it during the entire term. That he accomplished nothing of substantial benefit to him or to the defendant is not in the least controlling. It must be admitted that defendant parted with a consideration by conferring upon plaintiff the right to solicit and make sales of cars in these ten counties during the year, and it must also be conceded that such consideration has not and of course cannot be restored to it by plaintiff. Nor can defendant be placed in statu quo.
The theory upon which our first decision was based was that no consideration was received by plaintiff, because the contract was wholly executory and lacked mutuality. Consequently, it was a mere nudum pactum. We relied upon and erroneously misapplied certain authorities, including Velie Motor Car Co. v. Kopmeier Motor Car Co. 114 C. C. A. 284, 194 Fed. 324, and Oakland Motor Car Co. v. Indiana Automobile Co. 121 C. C. A. 319, 201 Fed. 499. These cases are not in point, for the plain reason that under their facts it appears that no part of the contracts had been executed and no benefits had been taken or consideration parted with thereunder.
In the Velie Case the manufacturer sued the dealer for damages for the latter's failure to perform the contract, he having repudiated the contract shortly after it was entered into.
In the Oakland Case tire dealer sued the manufacturer to recover for loss of profits occasioned by the latter's repudiation of the contract shortly after it was entered into. Both decisions are predicated upon the fact that the contract was executory.
The case at bar is to be differentiated from those cases in the important facts that, even conceding that the contract at the time it was made was nonenforceable because of lack of mutuality, nevertheless, the parties saw fit during the entire life of the contract to treat it as a valid and subsisting contract governing the rights of the parties,
This, of course, they had a perfect right to do, for it is not contended that the contract was illegal and such an one as the parties could not recognize and carry out. To the extent, therefore, that the parties acted under and performed the came it is valid and enforceable, and must measure their respective rights. See Peoples v. Evens, 8 N. D. 121, 11 N. W. 93; Fuller v. Rice, 52 Mich. 435, 18 N. W. 204; Pfeiffer v. Norman, 22 N. D. 168, 38 L.R.A.(N.S.) 891, 133 N. W. 97; Martinson v. Regan, 18 N. D. 467, 123 N. W. 285; Peoples v. Citizens' Nat. L. Ins. Co. 11 Ga. App. 177, 74 S. E. 1034; Grove v. Hodges, 55 Pa. 504, 2 Mor. Min. Rep. 698.
The theory upon which this court in its first opinion decided the case was not urged or relied upon by plaintiff's counsel, either in the district court oi in their printed brief in this court, but, upon oral argument on rehearing, they adopted such theory for the first time. The fallacy of such theory is, we think, quite apparent when we consider the fact that both parties recognized and acted under the contract during its entire existence. If the contract was wholly executory on both sides and voidable for lack of mutuality, an entirely different situation would be presented, but plaintiff saw fit to avail himself of the privileges awarded him under the contract, and because he was unsuccessful in making sales of cars he now seeks to recover back what he parted with under the contract, although compelled to admit that, defendant lived up to the contract in all respects in so far as plaintiff enabled it to do so.
The trial court was, we think, clearly in error in holding that defendant failed in its proof. It had no burden of proof to meet in order to defeat plaintiff's recovery. It did not seek to recover damages under the contract, but it merely sought to defeat plaintiff's recovery of such deposit by showing that it was actually damaged by plaintiff's breach to an amount greater than the deposit, thereby disproving any equity in plaintiff's claim. We think the' proof amply sufficient for such purpose, but granting, for the sake of argument, that it failed, still plaintiff cannot recover in any event on the conceded facts, for the reason, as above stated, that he has failed to show that, in equity and good conscience, he is entitled to a return of the payments made by him. He breached the contract, while defendant faithfully complied therewith as far as plaintiff would permit it to do. Furthermore, as before stated, plaintiff is not in a position, even if willing, to restore to defendant what it parted with under the contract, so as to put it in statu quo.
"The action for money had and received proceeds on the ground of a disaffirmance of the contract and a restitution of the -thing given in exchange. And the other party to the contract must be placed in as good a position as he was before the contract was entered into." 27 Cyc. 871, and cases cited. How can plaintiff at this late date disaffirm (he contract which has lived its allotted life, during which time both parties acted under it ? That plaintiff's action to recover such deposit as money had and received will not lie under the undisputed facts is elementary. In support of our views we deem the citation of authorities unnecessary, but see generally the article entitled, "Money Received." in 27 Cyc. 847-885. It is idle to contend from this record that defendant was in default in any respect. At no place in his testimony does plaintiff make any such claim. On the contrary, he testified in effect that defendant's officers, so far as he could judge from what they said and did, were anxious to have him make good under the contract, and that he did not know as they ever at any time put any hindrance in his way of making g'ood under the contract. Certainly, in the light of the admitted fact that plaintiff wholly failed to secure purchasers of cars, and was unable to take and pay for any, no duty rested upon defendant of tendering delivery. Respondent'evidently realized at the trial that he was confronted with a serious question under the facts regarding his right to recover such deposit as money had and received, for he sought to prove a conversation with Barrett at the time the written contract was executed to show, contrary to the express stipulation of such contract, that Barrett assured him in effect that such stipulation meant nothing, and that any balance of such deposit remaining at the end of the season was to be returned to respondent. There are two answers to such theory: First, this testimony was objected to and was clearly inadmissible as tending to vary the terms of the written contract ; and, second plaintiff's action, being for money had and received, is necessarily predicated upon an implied promise to repay such money. If an express promise existed, the action should be based thereon. Furthermore, of what value as a guaranty of respondent's faithful performance of the contract would such deposit be if, as respondent undertook to prove, the same, or any balance remaining of such fund, was to be returned unconditionally ?
The order appealed from is reversed.