Court Opinion

ID: 3840989
Source: CourtListenerOpinion
Date Created: 2016-07-06 08:10:13.607015+00
Date Added: 2024-06-11T07:40:31.302289
License: Public Domain

ON THE MERITS                              (286 P. 554)
Department 2.
The defendant appeals from an adverse judgment rendered on the verdict of the jury. On April 2, 1926, the parties entered into the following contract:
"This contract made and entered into this 2d day of April, 1926, by and between Prest-O-Graph Sign Service, of Portland, Ore., First Party, and David Hodes Co., Inc., (a corporation, partnership, firm), Portland, Oregon, Second Party.
"First party, in consideration of the agreements of second party herein set forth, agrees to place 50 metal signs, carrying the advertisement of second party on Display Posts, controlled or owned by first party, said Posts to be of wood and having ornamental head-pieces. The dimensions of said posts to be approximately 6 in. by 6 in. by 16 ft., and to be set approximately three feet in the ground. Said posts to be erected on private property along the public roads leading into Portland, Oregon.
"Said signs to be eight ft. by eight cut-out feet in size and made of 28 gauge iron.
"Second party agrees to pay first party or its assigns therefor the total of the installments mentioned, as follows: The sum of one hundred ($100) dollars as soon as said signs are placed as above mentioned, and a like sum monthly thereafter during the term of this contract, all payments to be made to first party, its successors or assigns. Signs are to be varnished once every four months.
"First party agrees to maintain by making an inspection of all signs, replacing any that may have become destroyed, once about every ninety days without extra cost to second party. Colors guaranteed against fading. *Page 602 
"First party agrees to send second party a penciled sketch of advertising copy, and second party agrees to return said sketch within three days after receipt of same.
"This contract shall be and remain in full force and effect for a period of thirty-six months from the time said signs are placed on the Display Posts, Advertiser to have the privilege of renewing this contract at expiration.
"The signing of this contract shall constitute an order from second party for the signs above mentioned, which cannot be countermanded without first party's written consent. No verbal agreements recognized, and all stipulations must be embodied herein.
"It is hereby agreed that upon failure, or default of second party to pay any of the installments when due as herein mentioned, the first party may, at its election, declare the total amount of said installments remaining unpaid due and payable.
"This contract signed in triplicate this second day of April, 1926. Prest-O-Graph Sign Service, by E.C. Johnson, Sales Manager. David Hodes Co., Inc., (Second Party) by David Hodes."
The signs provided for in the contract were duly manufactured and installed by the plaintiff. The defendant made the monthly payments provided for in the contract for a period of eighteen months to and including the month of February, 1928, amounting to $1,800. On March 26, 1928, defendant wrote the plaintiff that in its opinion the contract had not been properly performed by the plaintiff in that the plaintiff had failed to keep the signs properly varnished and in condition, and notified the plaintiff that the contract was repudiated and that the defendant would make no further payments thereunder.
On March 31, 1928, plaintiff commenced this action, alleging the above facts; that he elected to declare the *Page 603 
remaining installments under the contract immediately due by virtue of the acceleration clause for the reason that the defendant failed to pay the March installment of $100, and prayed for judgment in the sum of $1,800. The defendant filed an answer in which it denied the performance of the contract by the plaintiff, and by way of counterclaim set forth breaches of the contract on the part of the plaintiff in that the plaintiff had neglected to maintain said signs by varnishing them at least once every four months and to keep the signs in a readable condition, or to inspect the signs in accordance with the terms of the contract, and prayed for damages by reason thereof in the sum of $1,200. The jury returned two verdicts, one in favor of the plaintiff for the amount prayed for in the complaint, and the other in favor of the defendant, based on its counterclaim, in the sum of $100. Judgment was rendered on these verdicts in favor of the plaintiff for the sum of $1,700.
By the contract the sign company obligated itself to construct fifty intricate two-way, cut-out road signs which were expensive to manufacture and of use only to the purchaser, which, when paid for, were to become the property of the defendant. It appears that the cost of making these signs was about $35 each, or a total of about $1,750, while the cost of maintaining and keeping up the signs, stipulated in the contract, amounted to about 20 per cent of the contract price to be paid. The contract contained the provision that "the signing of this contract shall constitute an order from the second party for the signs above mentioned, which cannot be countermanded without the first party's written consent," and also an acceleration clause in case of default in the payment of the installments *Page 604 
when due. It is contended by defendant, in substance, that plaintiff could not recover in an action on the contract but was relegated to an action for damages for breach of the contract, and in no event would defendant be liable for more than $100.
In a contract where the covenant to pay the purchase price is an independent covenant, the purchase price may be recovered even after repudiation by the buyer: Loveland v. Warner,103 Or. 638 (204 P. 622, 206 P. 298); International Textbook Co. v.Martin, 221 Mass. 1 (108 N.E. 469). A covenant to pay the purchase price is held to be independent of performance in the following instances: (1) Where the purchase price, by the terms of the contract, becomes due or may become due before performance by the seller is completed: 13 C.J. 570; Krebs Hop Co. v.Livesley, 51 Or. 527 (92 P. 1034); Brenon Mfg. Co. v. Martin,27 N.M. 74 (196 P. 172). (2) Where the terms of the payment of the purchase price, in accordance with the contract, may be accelerated: Alexander Hamilton Institute v. Hart, 180 Wis. 90
(192 N.W. 481). The seller may recover the purchase price after repudiation by the buyer if the contract is to manufacture special articles for the buyer and he has substantially completed their manufacture: Edmunds v. Welling, 57 Or. 103 (110 P. 533);Alabama Grocery Co. v. Hammond, 285 Fed. 723.
The case of Loveland v. Warner, supra, is very much in point because the contract there involved is similar to the contract involved in the present case. The court held that the obligation to pay the purchase price was an independent covenant which became absolute when certain advertising matter was delivered, and was independent of performance of further stipulations in the contract. The court, speaking by Mr. Justice BURNETT, *Page 605 
after discussing the principles which distinguish dependent from independent covenants, said:
"We will apply these principles to the contract in question. The first clause is a distinct order for goods mentioned on the back of the contract, `in payment for which' the defendants delivered the six notes in controversy. This constituted a complete, separate and independent transaction. The promise to pay a certain sum of money absolutely and at all events in consideration of the delivery of the goods, was an independent covenant, practically so characterized by the terms of the contract."
We have in the present case: Precedence of the time of payment before the time of full performance; acceleration provisions in case of default in the payment of any installment; and provisions that the contract is not subject to revocation. The contract is practically a conditional sales contract with the added feature that the seller agreed to keep the signs in repair. These provisions clearly mark the contract as having independent covenants: Alexander Hamilton Institute v. Hart, supra. We take from a note in 51 L.R.A. (N.S.) p. 735 at p. 759, the following:
"Although the purchaser refuses to receive goods sold on conditional sale when tendered, if they are appropriated to the contract by the seller, the great weight of authority sustains the right of the latter to recover the purchase price, where the contract contemplates possession by the purchaser before payment, since, by a contract of this character, the purchaser agrees that the payment of the purchase price shall precede the vesting of the title to the property in him."
It is a general rule that where a party, bound by an executory contract, repudiates his obligation before the time for performance, the promisee (in the present case the plaintiff) has, according to the great weight *Page 606 
of authority, an option to treat the contract as ended, so far as further performance is concerned, and to maintain an action at once for the damages occasioned by such anticipatory breach: 13 C.J. p. 651, § 725. It is stated in 13 C.J., at page 653, thus:
"Where there has been a renunciation of an executory contract by one party, the other party has a right to elect between the following remedies: (1) To rescind the contract and pursue the remedies based on such a rescission. (2) To treat the contract as still binding and wait until the time arrives for its performance, and at such time to bring an action on the contract for breach. (3) To treat the renunciation as an immediate breach and sue at once for any damages which he may have sustained."
This option or right of election, however, is in favor of the party who has not breached the contract, and the renouncing party cannot force acceptance. The other is not bound to sue for a breach of the contract before the day fixed for performance arrives: 13 C.J. 655, § 730. The promisee, in case the promisor refuses further performance, is not bound to rescind the contract. He may keep it alive and sue upon it or he may adopt a middle course and treat the contract as at an end for the purposes of further performance but is still alive for the purpose of adjusting the rights of the parties as to the breach. In the present case the plaintiff adopted the second remedy named above, and waited until, under the acceleration clause, the payments were due.
The true test, as to whether covenants of a contract are dependent or independent, rests on the intention of the parties, to be determined from the sense of the entire contract rather than from any particular form of expression or the order in which the stipulations *Page 607 
occur in the instrument, the order of time in which the intent of the transaction requires performance being controlling. The intention must be gathered from the contract according to the ordinary rules of construction, on consideration of both its language and subject-matter: 13 C.J. 568, § 539; First NationalBank v. Morgan, 132 Or. 515 (284 P. 582, 286 P. 558). We take from a note in 13 C.J., page 568, the following:
"The parties have an undoubted right, if they please, to make their covenants dependent or independent throughout, or to make the covenants independent as to one thing and dependent as to another. They have a right to mould their contracts so as to suit their mutual convenience and interests; and when the courts can ascertain their meaning, they are so to construe the contract as to give effect to that meaning, provided the purpose be lawful:Nesbitt v. McGehee, 26 Ala. 748, 756, (quot. McCormick v.Badham, 191 Ala. 339, 343, 67 So. 609)."
Taking the contract in the present case by its four corners, it is plain that it was not intended by the parties that the payment for the manufacture and installation of the signs should not be made until after they had been kept in repair and varnished for three years. The main part of the contract was performed on the part of the plaintiff when the action was commenced and the jury could easily estimate the damage or expense of keeping the signs varnished and in repair and allow the defendant a reduction on the purchase price or contract price, as they did in the present case. The covenant to pay the contract price, we think, was an independent covenant.
There was no error in the court's refusing defendant's motion for a directed verdict or in refusing to *Page 608 
render a judgment on the verdicts in favor of the defendant or in not rendering a judgment in favor of the plaintiff for only $100.
It appears that the defendant had one Biermeister take photographs of the fifty signs mentioned in the contract. David Hodes, as a witness for defendant, stated that he did not exactly employ Biermeister, but told him he would refund the cost of the films and would pay for the films if he would take a few snapshots and bring them to the defendant. The pictures referred to were introduced in evidence. The defendant assigns as error the introduction of testimony by plaintiff of the witness Klein to the effect that the photographer Biermeister defaced some of the signs by tearing off panels which, in two or three photographs, showed the same to be lying on the ground near the posts upon which the signs were fastened. Defendant contends that there was not sufficient evidence that Biermeister was an agent of the defendant or authorized to make such defacement of the signs. He was employed by the defendant to take the photographs, which he did. The defendant accepted them and introduced the photographs in evidence showing the defacements. They were taken after the defacement of the signs. By accepting the acts of Biermeister the defendant ratified all of his acts. The right of a principal to ratify unauthorized acts of his agent is subject to the limitation that he must ratify the act entirely or disaffirm it — he cannot accept the benefits and repudiate the obligations: La Grande National Bank v. Blum, 27 Or. 215
(41 P. 659); McLeod v. Despain, 49 Or. 536, 552 (90 P. 492, 92 P. 1088, 124 Am. St. Rep. 1066, 19 L.R.A. (N.S.) 276); Mechem, Agency, §§ 128, 130, 151. There was no error in admitting such testimony. *Page 609 
After a careful examination of the record we find no error therein.
The judgment of the circuit court is therefore affirmed.
COSHOW, C.J., and BELT, J., concur.