Court Opinion

ID: 5367896
Source: CourtListenerOpinion
Date Created: 2022-01-08 07:56:23.210475+00
Date Added: 2024-06-11T08:29:58.676549
License: Public Domain

Heffernan, J.
(dissenting). I cannot agree with the majority. The principal facts are stated in the prevailing opinion and will not be repeated here.
Claimant and the State entered into a contract by the terms of which claimant was to supply Creedmoor State Hospital with milk during the year 1938. At the time this contract was made claimant was able to purchase milk at the rate of $1.70 per hundredweight.
On August 25, 1938, the Commissioner of Agriculture and Markets pursuant to law duly promulgated and issued an official order fixing the price of milk for the months of September, October, November and December at $2.47 per hundredweight, which included a charge of two cents per hundredweight for administration purposes. As a result of this order, instead of being able to purchase milk at $1.70 per hundredweight, claimant was required to, and did, pay the price fixed in the official order, making its loss seventy-seven cents per hundredweight. Concededly as a result of the State’s proclamation claimant sustained a loss of $6,546.61.
Claimant applied for an adjustment of the contract price to the extent of the increase in its cost under the price adjustment provision of the contract. The State rejected this claim and now contends that its promise to adjust prices is an illusory one. This is far from an honorable position for the State to take. In dealing with its own citizens the State should be governed by the same rules of common honesty, fair dealing and justice which bind its citizens.
We think that the disputed provision in the contract is a binding obligation especially in view of the fact that the State by its own fiat increased the price of milk and placed the claimant in a position where it would inevitably sustain loss. The change in price was the result of the State’s own mandate. Who can doubt that if there had been a reduction in price, the State under the identical clause would not have insisted upon a credit?
Undoubtedly this provision in the contract is somewhat ambiguous. It should, however, be reasonably construed. The decision under review deprives claimant of the fruits of its labor. *430Simple justice, fair dealing and common honesty alike demand that we should not give judicial sanction to such a result. Contracts must receive a reasonable interpretation, according to the intention of the parties at the time of executing them, if that intention can be ascertained from their language. Where the language of a contract is contradictory, obscure or ambiguous, or where its meaning is doubtful, so that it is susceptible of two constructions, one of which makes it fair, customary and such as prudent men would naturally execute, while the other makes it inequitable, unusual or such as reasonable men would not be likely to enter into, the interpretation which makes a rational and probable agreement must be preferred. If one construction would make it unreasonable, while another would do justice to both parties, the latter will be adopted. Every intendment is to be made against the interpretation of a contract under which it would operate as a snare. (12 Am. Jur. Contracts, § 250.) The words of a contract will be given a reasonable construction, where that is possible, rather than an unreasonable one, and the court will likewise endeavor to give a construction most equitable to the parties, and which will not give one of them an unfair or unreasonable advantage over the other. So that interpretation which evolves the more reasonable and probable contract should be adopted, and a construction leading to an absurd result should be avoided. (17 C. J. S. Contracts, § 319.)
Every contract implies good faith and fair dealing between the parties to it. The courts always avoid, if possible, any construction of a contract that is unreasonable or inequitable, and especially one that will place one of the parties at the mercy of the other. (Simon v. Etgen, 213 N. Y. 589.) “Contractual obligations are fixed solely by the parties, and the language of a business contract must be construed in the light of what a business man would reasonably expect to give or receive, to perform or suffer, under its terms.” (Shirai v. Blum, 239 N. Y. 172.) “ In the transactions of business life, sanity of end and aim is at least a presumption, albeit subject to be rebutted.” (Outlet Embroidery Co. v. Derwent Mills, 254 N. Y. 179.) A contract will not be construed so as to render it oppressive or inequitable as to either party, or so as to place one of the parties at the mercy of the other, unless it is clear that such was their intention at the time the agreement was made. (Woods v. Postal Telegraph-Cable Co., 205 Ala. 236; 87 So. 681.)
The State prepared the contract in suit. In that contract it reserved the right to adjust the price for milk delivered so that such price would “ not be out of proportion to the terms of the *431official price regulations.” Later it fixed the price of milk at a figure ruinous to claimant. We are not willing to ignore as meaningless the promise which it made. Certainly its agreement meant something. It seems to us that the average intelligent man would not be doubtful of its meaning.
The judgment appealed from should be reversed, with costs and disbursements, and judgment directed in favor of claimant for $6,546.61, with interest.
Judgment affirmed, with costs.