Case Name: Scoville v. Terry
Court: Supreme Court of Appeals of Virginia
Jurisdiction: Virginia
Decision Date: 1888-02-16
Citations: 84 Va. 548
Docket Number: 
Parties: Scoville v. Terry.
Judges: 
Reporter: Virginia Reports
Volume: 84
Pages: 548–552

Head Matter:
Richmond.
Scoville v. Terry.
February 16th, 1888.
Contracts—Construction—Case at bar.—S. and T., lessees of hotel for a term of two and a half years, agreed to advance §8,000 for its improvement. At the end of said term, S. had leased it for five years. S. agreed to pay T. at the end of their joint term, §2,500 for his interest in the improvement. Before that time arrived, hotel was burned down. S. endeavored to escape paying the §2,500 on the pretext that, as T. was a part owner of the improvement at the time of its destruction, he should bear his part of the loss:
Held :
It was a sale in presentí for payment at a prescribed time in futuro, and S. is bound to pay T. the agreed price.
Appeal from decree of corporation court of Lynchburg, rendered June 20th, 1885, in the attachment suit in equity under Code 1878, chapter 148, section 11, wherein E. Stockton Terry was complainant, and L. ~W. Scoville, non-resident, and A. B. Ferguson and others, garnishees, were defendants. The decree being adverse to Scoville, he appealed to this court.
Opinion states the case.
T. N. Williams, for the appellant.
J. W. Daniel, for the Appellee.

Opinion:
Hinton, J.,
delivered the opinion of the court.
The propriety of the decree appealed from, depends upon the construction to be given to the second clause of what is known in the record as the agreement of May 17th, 1881, which agreement, leaving out the signatures of the parties, is in the words and figures following:
"Memorandum. That L. W. Scoville and R. S. Terry, who constitute the firm of Scoville & Terry, have this day agreed— First. That they will, as a firm, advance the sum of §8,000, and apply the same to the cost of refitting, as far as the same will go, the unfinished rooms in the Kimball House, in the city of Atlanta. Such refitting shall not exceed the sum of $8,000 in cash. Second. At the termination of the present lease of the Kimball House in the city of Atlanta, held by said Scoville A Terry, the said Scoville, who, with another, has leased said house for five years from the termination of said lease, promises to pay said R. S. Terry the sum of twenty-five hundred dollars for his interest in said sum so to be expended in such improvements. Third. This contract is in no way to affect the contract existing between the said Scoville A Terry and the owners of the Kimball House, or any sum which said owners of the said house are to spend on furnishing or repairing it. Given under our hands this 17th day of May, 1881."
And in construing this contract we must look to the language employed, the subject matter, and the surrounding circumstances ; for, as has been well said, courts are never shut out from the same light which the parties enjoyed when the contract was executed, and, in that view, they are entitled to place themselves in the same situation as the parties who made the contract so as to view the circumstances as they viewed them, and so to judge of the meaning of the words and of the correct application of the language to the things described. Nash v. Towne, 5 Wall., 699; Moran v. Prather, 23 Wall., 501; Talbott v. Railroad Co., 31 Gratt., 689.
For some time prior to the making of this agreement, these parties had been engaged as partners in the conduct of the hotel business, both in Lynchburg and Atlanta. In Lynch-burg, Virginia, the business was being conducted at both the Arlington House and the Horvell House—of which houses Seoville and Terry were joint owners, under the immediate supervision and management of Terry; but in Atlanta, Georgia, the business was conducted at the Kimball House, of which these'parties were sub-lessees, by Seoville. The lease of the Kimball House had at this time less than two and a half years to run before it would expire by limitation, on the 1st day of October, 1883. In anticipation of the expiration of this lease, Seoville, in conjunction with a new partner, (not Terry,) had leased the Kimball House for a new term of five years, to begin when the term of Terry and himself should expire. There were still some sixty-five unfinished rooms in the Kimball House, which Seoville & Terry under the terms of their lease, had the right to finish, furnish, and use during their term without any addition to the rent. It was now settled that a great cotton exposition would be held in Atlanta in the following autumn, and hence it was regarded by Seoville as extremely desirable that these rooms should he fitted up for the occasion. This, however, could only be done, under the terms of the partnership, by mutual consent; and so Seoville met Terry in Lynchburg on the 17th May, 1881, and urged upon him to consent that $8,000, of which " $4,000 was to he Terry's input" and $4,000 was to be Scoville's, might be expended in fitting up these rooms. To this proposition Terry refused to assent, unless Seoville would agree to pay him hack $4,000 when the lease, to which he was a party, should expire; and thereupon it was agreed to leave the matter to the arbitrament of Messrs. Kirkpatrick & Blackford, and the result was the contract of May 17th, 1881, in which Seoville agrees "to pay said R. Stockton Terry the sum of twenty-five hundred for his interest in said sum," meaning the $8,000 " so to be expended in such improvements."
In the light of these circumstances, it seems too plain to admit of discussion, that the only reason which could have influenced the arbitrators in making this award, was a kindred one to that which had in the first instance induced Terry to demand that upon the expiration of the lease Scoville should return him the whole amount of $4,000 which he was to invest—namely, that the loss of Terry's capital should be apportioned between Scoville and Terry in proportion, approximately at least, to the time during which each of them was to enjoy the benefits of the.expenditure. They reasoned thus: If Scoville is to enjoy the benefits to be derived from Terry's outlay, for seven and a half years, while Terry can only be benefitted for less than two and a half years, it is equitable and just that Scoville should lose eventually $2,500, while Terry should lose at once $1,500. This we regard as so clear that it needs no argument to enforce it. Res ipsa loquitur. But it is contended for the appellant that, as this property was destroyed by fire about one and a half months before the expiration of the Scoville & Terry lease, while it was the property of Scoville & Terry, that Terry should bear his part of the loss. This argument, however, assumes what was manifestly not true—namely, that the property was the property of Scoville & Terry at the time of the loss. The effect of the contract was, unless we are to add a term to the agreement, to vest in the owners of the hotel a fee simple title in the improvements, from the time they were made,'subject' to the tenancy of Scoville & Terry for two and a half years, and further to the tenancy of Scoville, which was to commence, when the lease of Scoville & Terry should cease. It was, to use the happy language of the learned counsel for the appellee, nothing more nor less than an "agreement to create property which, by the very act of creation, vested in certain ways, more or less beneficial to parties, anct jn which two of the parties agreed to bear, mutually, the expense of creation, with an equitable agreement of the one to refund five-eighths of his expense to another, in consideration of the fact that he, the promisor, "became by its creation vested with a longer, continuing interest." The whole matter may be summed up in this: The contract was clearly a contract of hazard by which Terry sunk $1,500, absolutely and forever, while Scoville took the risk of losing $6,500, the $4,000 which he had himself put in, and the $2,500 which he promised absolutely to pay back to Terry.
The decree is, therefore, in our judgment, clearly right, and must be affirmed.
Decree aeeirmed.