Court Opinion

ID: 6568445
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:21:52.233846+00
Date Added: 2024-06-11T15:56:49.182138
License: Public Domain

GILBERT, Circuit Judge
(dissenting).
The facts in the case as found by the court below are, in substance, the following: In August, 1909, a representative of the appellants approached the attorney for the International Trust Company, the predecessor in interest of-the appellee, and stated that it was the desire of appellants to secure possession and control of the Sheep creek power plant, then owned by the trust company, and construct upon the millsites, upon which said power plant was situated, a water power plant of substantial size and efficiency of a capacity to produce 3,000 horse power, and in exchange for said property to provide for the International Trust Company sufficient power to operate its mines known as the Sheep creek mines; and he represented that an uninterrupted current of 200 horse power continuously at the. disposition of the said trust company would be sufficient for that purpose, said representation referring only to the ordinary electric load necessary to the operation of the mines: and the mining machinery, and not including any estimate, of the power momentarily necessary to start machinery that would consume such power. Thereafter the parties agreed upon a contract substituting 300 horse power instead of 200 horse power, of which the trust company had ascertained that it would need the continuous use. The matter of surges momentarily necessary to start machines was not' discussed between the contracting parties, and no reference was made thereto in the contract; but from the surrounding circumstances it appeared that it was the intention of the parties to provide for the beneficial and uninterrupted use of 300 actual horse power to the trust company, including starting surges, which would insure the right to use *224such horse power in connection with the ordinary machinery used in mining and the ordinary forms of induction motors in common use in mining for loads of 300 horse power or less.
The court found that, for loads of 300 horse power or less, induction motors having an inherent phase of displacement and power factor less than unity were in ordinary and practical use and were contemplated by the parties at the time of the execution of the contract, and that the power contracted for was 300 actual horse power as distinguished from 300 apparent horse power. The court further found that in making the contract the predecessor in interest of the appellee had a right to rely upon the representations made by the appellants to the effect that it was their purpose to furnish the amount of power stipulated in the contract in real, actual, and practical working efficiency, together with such momentary surges, as were necessary to start the machinery. And the court found that arrangements for the development of the appellee’s mining property were made in reliance upon the contract of the appellants that they would furnish an uninterrupted current of 300 electric horse power for its actual and practical use, and that, relying upon said contract, a large force of men was engaged for underground development, and a large' sum of money was expended upon said mining property; and that from November 8, 1912, to December 2, 1912, power was furnished the appellee under such understanding, but that from and after December 24, 1912, when the mine was shut down for Christmas day, the appellee, has been unable to start the machinery with the current provided by the appellants except under the prders of the court, and that after said date the appellants refused to supply the surges necessary to start the appellee’s machinery. The court found, also, that the starting of machinery which will consume a given amount of power often requires what is known as a starting surge, which lasts from 10 to 30 seconds, which from a practical standpoint is not taken into account or charged for in electrical connections; that in the Juneau mining district it is not customary for the appellants to charge any other customer for the necessary starting surges for machinery connected with their power plant, but the power is measured upon the amount taken after the ma*225chinery is started and in operation; and that it is the common practice, where a certain amount of horse power is normally used, for the producing company to allow a reasonable surge to the consumer sufficient to start and put in operation machinery which will normally consume the current provided for.
The court further found that, irrespective of the representations of the parties, it was the intention of the parties to the contract to provide for the actual and beneficial use by the appellee’s grantor of a current of 300 real horse power, and that from the surrounding circumstances a starting surge was naturally to be implied or presumed, and that without a starting surge (in connection with K induction motors which the court found is the ordinary type of motor in mining use for loads of 300 horse power or less) the practical and beneficial use of more than 100 horse power could not have been obtained, and that under the conditions existing aforesaid at the time when the contract was executed the parties could not have contemplated the uninterrupted delivery of 300 horse power provided for in the contract unless a starting surge was implied in the said contract.
These findings of the court are amply sustained by the evidence in the case. Expert witnesses were called, who testified that, where the use of a named amount of electrical horse power is provided for without further definition in a power contract, it is the practice and common usage of power companies to permit a surge whenever necessary so that the use may be enjoyed approximately to its full extent, and so that machinery of the ordinary inductive type may be put in operation at approximately the amount of horse power provided for in the contract; that a starting surge not to exceed half a minute is not construed as power in excess of that contracted for, provided that standard motors or apparatus are used.
The general superintendent of the appellants’ plant, who was an electrical engineer, testified that the appellants furnished power also to the Alaska-Juneau Company with starting surges, and made no charge for starting surges and did not include the starting surges in its records.
Turning to the language of the contract, we find that it gives the appellee the right “to take a current not to exceed *226three hundred (300) electric horse power,” that the appellants “undertake, covenant and agree to deliver said current,” that the consideration for the contract is “the right to use the three hundred (300) electric horse power,” and that the contract “contemplates the delivery of an uninterrupted current.” It is not disputed that Form K General Electric motors had been universally used in Alaska at the time when this contract was made; and we are justified in assuming that it was in the minds of the contracting parties at the time of making the contract that such motors would be used in the mines to be operated by the appellee, and that the reservation of 300 horse power was for the purpose of effecting the successful operation of those mines. The evidence shows that said amount of current was necessary for that purpose. It was known that the K General Electric motor required at least three or four times, and possibly more, electric current to start than it did to operate it under its normal load, and that not more than 100 horse power could be used by the appellee without the starting surge. It is clear, also, that at the beginning of the appellee’s operation under the contract the appellants so understood their obligation and gave that construction to the agreement. The causes which led them to change their view of their obligation are not disclosed.
It is a cardinal rule that in construing a contract the court must give effect to the intention of the parties. Language in the instrument which narrows the general purpose of the contract, and defeats a reasonable and just result, must be construed with reference to the known facts. In Western Lumber Co. v. Willis, 160 F. 27, 87 C.C.A. 183, this court, applying the rule announced in Chicago, Rock Island & Pac. Ry. Co. v. Denver & Rio Grande Ry. Co., 143 U.S. 596, 609, 12 S.Ct. 479, 36 L.Ed. 277, said: “In the interpretation of a contract, the court may consider the relations of the parties, their connection with the subject-matter of the contract, and the circumstances under which it was made.”
In Horgan v. Mayor of New York, 160 N.Y. 516, 55 N.E. 204, it was said: “It is well settled law that the meaning of a contract is to be gathered from a consideration of all its provisions, and the inferences naturally derivable therefrom, as to the intent and object of the parties in mak*227ing it, and the result which they intended to accomplish by its performance.”
When the contract here under consideration is viewed in the light of these rules for its construction, I can see no escape from the conclusion that the court below properly interpreted its terms.
That court correctly held, also, that the obligation to furnish a starting surge was implied in the contract which was made. The contract clearly contemplated that the appellee was to have the beneficial use of a current of 300 horse power. It contains a covenant that the appellants shall deliver that power. If to the use or the delivery of the specified power a starting surge was necessary, the promise to furnish it should be implied.
“A contract, it may be truly said, includes not only what the parties actually wrote down or said, but all those things which the law implies as part of it, and likewise all matters which both the parties intended to express, but did not.” 9 Cyc. 252.
“Although a party does not in express terms undertake to do a particular act, a covenant to do it will be read into an instrument if from the text of the agreement, or the surrounding circumstances, it is manifest that the parties so intended.” Patterson v. Guardian Trust Co., 144 App.Div. 863, 129 N.Y.S. 807; Booth v. Cleveland Mill Co., 74 N.Y. 15; Tuttle v. Woolworth, 74 N.J.Eq. 310, 77 A. 684; Creamer v. Metropolitan Securities Co., 120 App.Div. 422, 105 N.Y.S. 28.
The decision of the court below may be sustained, also, on the ground of the proven custom of companies which furnish electric current to permit a surge whenever necessary, under a contract to furnish a named amount of electrical horse power.
“Parties, who contract on a subject-matter concerning which known usages prevail, by implication incorporate them into their agreements, if nothing is said to the contrary.” Robinson v. United States, 13 Wall. 363, 20 L.Ed. 653.
The construction given to the contract by the majority of this court brings about a result that was not contemplated by either party to the contract at the time when *228it was made and upon which their minds never met. By that construction the appellants receive judicial sanction to say, in effect, to the appellee: “It is true that for a valuable consideration we covenanted with your grantor to furnish it a current of 300 horse power; and it is true that you cannot get what we promised unless we deliver it to you by an initial surge, but you are helpless and you can never use that which we agreed that you should have, for the reason that there is no express stipulation in the contract that we should furnish the surge. It is not so nominated in the bond.”
The plain answer to that is that the parties contracted with reference to the known conditions and with knowledge of the fact that a surge was necessary in order to carry out the express provisions of the contract in accordance with the intention of the parties, and that a promise to furnish it was necessarily implied.
Where a contract is susceptible of a construction in accordance with justice and fair dealing, the court should adopt it. As was said in Noonan v. Bradley, 9 Wall. 394, 19 L.Ed. 757: “When an instrument is susceptible of two constructions — the one working injustice and the other consistent with the right of the case — that one should be favored which standeth with the right.”