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haps a promise on the part of defendants to buy beer, etc., from plaintiff may be inferred from this general language, but it seems unnecessary to definitely pass on the point.
The contract fixes no price at which plaintiff was to furnish beer, etc., to defendant. He did not bind himself to furnish it at any agreed price. The plaintiff did not promise and bind himself to sell beer, etc., to defendant at all. He assumed no obligation to do so, and it was left entirely at his pleasure to sell defendant beer, etc., or not to sell it, and any failure to so furnish and sell would have given plaintiff no cause of action against defendant. An executory contract must have the element of mutuality.
An agreement on part of defendant to buy beer of the plaintiff is not enforceable against the defendant where there is no agreement or promise on the part of the plaintiff to sell such articles to him. Hence the contract cannot be the basis for a suit for damages for not buying of the plaintiff.
The contract is not enforceable as one for liquidated damages.
It will be observed that by the contract the same damage, three thousand dollars, is fixed as the estimated and agreed damages for a complete violation of its terms and for a partial violation.
According to the terms of the contract, if the defendant failed and neglected during the entire five years to buy any. thing of the plaintiff, the damage would have been three thousand dollars. Whereas, if he bought all beer and other supplies for the saloon during all the five years except the last week of said five years' period, he would also owe plaintiff three thousand dollars.
This shows that no good faith valuation of the damages, which might result from the breach of the contract, was made.
“A good faith valuation of the damages which will result from the breach of a contract is generally upheld and the amount specified recoverable." (Elliott on Contracts, sec. 1559.) And the converse is equally true, viz. : That where the contract on its face shows that no good faith estimate and valuation of the damages that might result from a breach of the contract was ever made or attempted, the amount thus arbitrarily fixed without any reference to the actual damages that may be incurred will not be recoverable as liquidated damages. In 2 Greenleaf on Evidence, section 259, the rule is
said to be that it must be "apparent that the damages have already been the subject of actual and fair calculation and adjustment between the parties.'
We conclude that the demurrer to the complaint should have been sustained. That the contract is not enforceable as a contract for liquidated damages, and by reason of its lack of mutuality of obligation and uncertainty cannot be the basis of an action for actual damages.
The judgment is reversed, with direction to sustain the demurrer to the complaint.
Chipman, P.J., and Hart, J., concurred.
A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on October 24, 1916, and the following opinion then rendered thereon:
THE COURT.-The petition for transfer and hearing in this court is denied. We think the judgment was properly reversed upon the first ground stated in the opinion of the district court of appeal, viz.: That the complaint does not state facts showing a substantial breach of the agreement. We are not satisfied of the correctness of the views expressed by the district court of appeal on other points, and withhold the expression of any opinion on such points. Upon a new trial the superior court will not regard as decided or as the law of the case any proposition except the one which is above stated to have our approval.
[Civ. No. 1475. Third Appellate District.-August 28, 1916.) GRANT FEE, Respondent, v. MCPHEE COMPANY (a Cor
poration) et al., Appellants.
ACCOUNT STATED ESSENTIALS OF-New CONTRACT.-An account stated
is a writing which exhibits the state of account between parties and the balance owing from one to the other; and when assented to,
either expressly or impliedly, it becomes a new contract. ID.—ACTION FOR SERVICES_SUPPORT OF FINDINGS.-In this action to re.
cover an alleged balance due for services in superintending the con
struction of certain buildings for a contracting company, it is held that the finding that the document upon which the plaintiff relied as an account stated constituted such an account is supported by
the evidence. [0.-OPENING OF ACCOUNT-FRAUD OR MISTAKE.- In the absence of al.
legation and proof of fraud or mistake which taints the entire contract, the court will not open and unravel it as if no accounting had been made, but the settlement will be binding except for the errors
shown. ID.--EVIDENCE-PROOF OF OMISSIONS AND ERRORS.-In an action upon
an account stated it is proper to allow evidence of omissions and errors therein and find in favor of plaintiff in accordance with the
facts. ID.--INTEREST-ALLOWANCE FROM COMMENCEMENT OF ACTION.-In an
action on an account stated, interest is allowable from the date of
the commencement of the action. ID.-SUPERINTENDENCY OF BUILDINGS FOR CORPORATION- PERCENTAGE OF
PROFITS-STATUS OF PARTIES.—Contracts between a corporation engaged in the general contracting business and an individual who is to superintend the construction of certain buildings for the former for a percentage of the "net profits" do not make the relationship
of the parties that of partners. ID - CONSTRUCTION OF TERM “NET PROFITS"-EVIDENCE.—Evidence of
similar contracts made between the parties is admissible to assist the court in interpreting the term "net profits."
APPEALS from judgments of the Superior Court of the City and County of San Francisco and orders denying a new trial. E. P. Morgan, Judge.
The facts are stated in the opinion of the court.
William P. Hubbard, for Appellants.
Aitken & Aitken, R. H. Countryman, and Frank W. Aitken, for Respondent.
CHIPMAN, P. J.-Two actions between the same parties are included in the appeal, one having been numbered in the court below 17,022, the other 18,032, both having been tried together. The transcript on appeal covers 1,292 printed pages and the briefs comprise half as many more. The appeals are by defendants from the respective judgments and from orders denying their motions for new trials made in each case, and
354 alleged errors of law are specified in the assignments of errors.
The complaint in the first action, No. 17,022, was filed June 6, 1908. It is therein alleged that defendant McPhee Company was a corporation organized and existing under and by virtue of the laws of California, with its office and principal place of business in the city and county of San Francisco; that defendants Daniel McPhee and Anna McPhee were at all times husband and wife; that defendant Daniel, during all the times mentioned, was doing business under the name and style of McPhee Company; that defendants sued fictitiously as First Doe, Second Doe, and Third Doe were the owners of one share each, and defendants Daniel and Anna McPhee were the owners of 2481/2 shares each of the capital stock of said corporation, the entire issued capital stock being five hundred shares; “that said defendants other than the defendants sued herein as stockholders of the defendant McPhee Company are indebted to this plaintiff in the sum of $13,649.27 upon and as for and upon an account stated made by and between said defendants except said defendants sued herein as stockholders and this plaintiff." It is then alleged that "said defendants other than those who are sued as stockholders of said defendant corporation within two years last past .. entered into written agreements with this plaintiff from time to time, by which it was agreed that in the course of the erection and construction of certain buildings, this plaintiff should act as the superintendent thereof and receive forty per cent of the net profits of the erection and construction of said buildings"; that plaintiff performed his part of said contracts and from time to time received various sums of money on account thereof; that on May 28, 1908, plaintiff and defendants “other than said defendants sued as stockholders” entered into an account stated and the amount of the indebtedness to plaintiff was fixed at the sum of $13,649.27, which said defendants promised to pay; that no part thereof has been paid, and that said stockholders are liable for their proportionate amount of said indebtedness.
In a second count of the complaint it was stated “that this plaintiff performed certain work and rendered certain services to defendants other than said defendants sued herein as stockbolders of the defendant corporation," and that plaintiff was to receive forty per cent of the net profits received for the
construction of said buildings; that the said profits thereof were $65,229,56; that forty per cent thereof is $25,991.82; that plaintiff has been paid $12,342.45, leaving due him the sum of $13,649.27. The prayer is for the last-mentioned sum, judgment being asked against the five stockholders named for their proportionate amounts.
A demurrer to the complaint was overruled and defendants, other than those fictitiously named, answered: Denied that Daniel McPhee "was doing business under the name and style, or name or style, of McPhee Company, otherwise or at all except under the name of McPhee Company, a corporation”; denied that defendant Anna was the owner of any greater number of shares of the capital stock of said corporation than ten shares; denied the indebtedness sued for; denied that they entered into written agreements with plaintiff by which it was agreed that plaintiff should act as superintendent of the construction of the buildings referred to and should receive forty per cent of the net profits thereof; denied performance by plaintiff of the conditions of the contracts alleged; denied making an account stated and that any amount of indebtedness was fixed. The averments of the second cause of action were sperifically denied.
The trial commenced on November 17, 1909, and, before its conclusion and on December 1, 1909, an amended complaint was filed, containing two counts. The allegations were the same as in the original complaint, with these exceptions: W. M. Willett, J. F. Campbell, and W. E. Lowe were substituted as defendants for First Doe, Second Doe, and Third Doe; it was alleged that defendant Daniel McPhee was the owner of 483 shares and defendant Anna McPhee of ten shares of the capital stock of said corporation; that the account stated was for $13,749.27 and that one hundred dollars had been paid thereon; the amount alleged in the second cause of action to be due was $15,649.27 and judgment was prayed for that amount.
A demurrer to the amended complaint was overruled and an answer was filed with similar denials as those contained in the answer to the original complaint.
On April 6, 1910, an amendment to the answer was filed, setting up two additional further and separate defenses, in the first of which it was alleged that in any account stated between