Court Opinion

ID: 9681993
Source: CourtListenerOpinion
Date Created: 2023-08-24 08:03:04.563636+00
Date Added: 2024-06-11T18:17:36.899733
License: Public Domain

STOKES, Justice
(dissenting).
I regret - that I cannot agree with my colleague? in their interpretation of the contract which forms the basis of this litigation. The controversy between the parties to the suit is confined to the provisions of Article IX of the contract which provides that: “Owner shall have the right to discontinue construction hereunder at any time deemed expedient by paying to contractor all of his costs etc.” The majority of the court interpret that provision to mean that thé owners had the right,- at any time, to discontinue, or bring an end to, the entire contract if they deemed it expedient to relieve themselves of its terms. If the parties intended the contract should have such a meaning, it was equivalent in practical effect to no contract at all because the owners could have cancelled it at any time they desired to do so. Wilson v. Studebaker Corp., D.C., 240 F. 801. Contracts of business men are assumed to have a practical purpose. "Courts will not assume that they intended to create the absurdity. of executing a contract which they agree to be no contract. These parties undoubtedly entertained a substantial practical purpose which the arrangement between them was to serve, but the appellees nullified any such purpose by arbitrarily cancelling the contract before the work began. The practical conditions were that each of them had an interest which he desired to' promote. The owners desired to arrange for the construction of 45 houses and the contractor desired to advance his interests by building them for the owners and thereby earning fqr himself a substantial remuneration. The contract implies that the owners did not feel safe in binding themselves to construct the full number of houses specified in the contract but felt that, before the entire 45 houses had been completed, economic conditions might change or other circum'sfances might arise under which it would not be expedient to build more than had "already beén constructed. For their protection against the consequences Of some change or contingency that would cause them to deem further construction inexpedient, the provision referred to was inserted. In my opinion it meant only that, if any condition should arise during the construction of the 45 houses which would cause the owners to deem it expedient to discontinue their construction, they would then have the right" to bring "an end to the contract. I find nothing in the terms agreed upon that could reasonably be construed as a right- of- the owners arbitrarily to terminate or cancel the contract.- Appellees themselves evidently interpreted the provision in the contract which gives them the' right to discontinue 'the construction to have reference to the construction of the houses instead of an arbitrary tight to terminate the entire contract bec'ause, in the notice they gave to appellant they said: This- is to advise you-that I'desire to exercise my right to “discontinue operations under said -contract and not commence any construction thereunder(Emphasis added.) ■ ' : -
Appellant' alleged in his petition" that, instead of discontinuing construction of the houses, appellees proceeded with their construction in the same manner that appellant was to construct them under the contract and that they had commenced the construction of 22 of' the houses referred to in the contract, upon a’ portion of the property described therein, and that they intended to proceed with the construction of all 45 of the houses provided for in the *942contract. Since the trial court sustained appellees’ exceptions ' to the petition, we must assume that the allegations therein were true and that, instead of discontinuing the construction of the houses, appel-lees proceeded with their construction and intended to complete the entire enterprise.
In my opinion-the provisions of Article IX of the contract established a condition precedent to appellees’ right to discontinue the construction of the houses, and thus terminate the contract. The condition precedent was that they deemed it expedient to discontinue their construction. According to the terms of the contract, they did not have the right to terminate it unless they deemed it expedient to discontinue construction of the houses and the fact that they themselves proceeded with their construction shows that they did not deem it expedient to discontinue their construction. White v. Mitchell, 30 Ind.App. 342, 65 N.E. 1061; Fessman v. Barnes, Tex.Civ.App., 108 S.W, 170; Electric Lighting Co., v. Elder, 115 Ala. 138, 21 So. 983; Richison v. Mead, 11 S.D. 639, 80 N.W. 131.
It is an old and well-established rule that while contracts may contain provisions for their cancellation, the party having such right is not permitted to exercise it improperly to the injury of the other party. He cannot exercise it in some other manner, nor upon some other ground, than that which the contract provides and thus escape all liability under it. -Moreover, if he does exercise it, it must be done in good faith. Sanger v. Slayden, 7 Tex.Civ.App. 605, 26 S.W. 847; Vidor v. Peacock, Tex.Civ.App., 145 S.W. 672; C. S. Martin & Son v. John Bonura & Co., Tex.Civ.App., 214 S.W. 841; Southern Mortgage Co., v. McGregor, Tex.Civ.App., 279 S.W. 860; West v. Suda, 69 Conn. 60, 36 A. 1015.
Appellees’ exceptions to the petition were, in effect, that it did not state a cause of action because it showed upon its face that appellees had-the right to discontinue construction of the houses by paying to appellant all costs incurred by him and the pro rata of- any fees earned by him at the time appellees exercised their right to discontinue the enterprise; that the petition showed upon its face that performance of the contract had not commenced; that the allegations concerning the continued construction of 22 of the houses by appellees were irrelevant and immaterial; that the petition showed upon its face that the contract could be terminated at any time appellees desired to terminate it and that they had exercised their right to do so; and that the petition did not allege appellant had expended any* money or earned any fees under the contract. These exceptions were all sustained by the trial court.
Since the condition precedent to appel-lees’ right to cancel the contract did not arise and, manifestly, they did not deem it expedient to discontinue construction of the houses, I think the court below erred in sustaining appellees’ exceptions to the petition and, in my opinion, the judgment should be reversed and the cause remanded.