
    LIABILITY OF OWNER OF PROPERTY DESTROYED BY FIRE FOR LOSS SUSTAINED BY CONTRACTOR.
    Superior Court of Cincinnati, General Term.
    William H. Donaldson v. The Sutherland Manufacturing Company.
    Decided, January 19, 1907.
    
      Contracts — When Separable — When Entire — ■Intention of Parties Controls — Building Destroyea by Fire — Before Completion of Contract for Installation of Gas Fixtures — Owner of Building Held not Liable — Either Under the Contract or on a Quantum Meruit — Present Sale — Part Performance.
    
    D contracted with the S. M. Co. for a system of gas and electric fixtures, which were to be installed complete and to his satisfaction in a dwelling which he was then erecting. The fixtures were to be paid for in a lump sum, and a part of them were to be manufactured after a special design. The contract was made in Kentucky and was to oe executed in Kentucky. After all the fixtures had been installed except two, but before the. house was ready for occupancy, it was destroyed by fire without fault of either party. Held:
    
    1. It is not the divisibility of the subject matter of a contract, but the intention of the parties, that determines its nature; and while the fact that it is divisible may assist in arriving at the intention of the parties, it can not be used to override a manifest intention to make it an entire contract.
    2. The contract in suit was not a present sale of chattels, but an entire contract of an executory character, and under the law of Kentucky there could be no recovery thereon by the contractor either on his contract or on a quantum meruit.
    
   Hoffheimer, J.;

Murphy, J., concurs; Hosea, J., dissents — ■ see separate opinion.

Defendant in error, manufacturer of and dealer in gas and electric fixtures, contracted to furnish and install gas and electric fixtures in the house of plaintiff! in error. According to the contract, the combination electric and gas fixtures were to be put up complete, and were to be to the satisfaction of Mr. Donaldson, afnd it was agreed that the job was to be first class in every particular, and that everything was to be done in accordance with the rules and regulations of the National Board of Underwriters, and to Mr. Donaldson’s entire satisfaction, “the whole to be $875.”

The fixtures are set out in the schedule, also the individual prices. The agreement was, however, as already stated, to pay a lump sum. It is also conceded that Mr. Donaldson reserved the right to disapprove of any of the fixtures, in which event the same were to be exchanged for others. The fixtures were selected from photographs, and had to be manufactured, with the exception of one. With the exception of two all had been delivered when, without fault of either party and before the house was ready for occupancy, it was destroyed by five. Defendant in error subsequently tendered the remaining fixtures, but they were refused.

Suit was brought on the account for the entire contract price, and a verdict was rendered for the full amount of the contract. A motion for a new trial was overruled and judgment entered up for the full amount of the contract price.

Error is prosecuted to this court, and it is claimed by plaintiff in error that the judgment should have been for plaintiff in error, because under the conceded facts the Sutherland Manufacturing Company could not allege and prove performance; and furthermore that it can not recover as on quantum meruit for the part performed. In other words, it is claimed that the contract entered into between these parties was an entire and indivisible one, and that as the destruction of the premises, including such part of the fixtures as were already delivered, was without fault of either party, it was impossible for the Sutherland Company to perform its contract, and therefore there could be no recovery.

The contract in our judgment was not a present sale of chattels, as claimed by defendant in error. -It could not have been such a contract because all the articles, with the exception perhaps of one, had to be manufactured according to special design and photographs. It was an executory contract to manufacture a complete lot of fixtures, which were to be to the satisfaction of the vendee, and were to be installed as already indicated.

The undisputed evidence shows that the contract was entered into in Kentucky and was to be performed in Kentucky. The validity, obligation, and effect of the contract is determinable therefore under the laws of Kentucky. Montana Coal & Coke Company v. The Cincinnati Coal & Coke Company, 69 Ohio State, 351.

The contract being an entire one, under the authorities of that state there could be no recovery either on the contract or on quantum meruit. The latest expression of the supreme court of that state is found in the case of Louisville Foundry & Machine Co. v. Patterson (Kentucky Court of Appeals, 1906, not yet reported). This case, it seems, is decisive, and would bar recovery. It was held that there could be no recovery for the part performance of a contract to install an elevator when the elevator and building were destroyed by fire without fault of either party, although the building of the elevator had so far progressed as to be in running order, and it would require but little more to place the elevator in the condition required by the contract. After pointing out- that the elevator was to be paid for when accepted by the architect, and that it was destroyed before it was completed or accepted, the court goes on to say: '

“It has been ruled in a number of cases that under contracts like the one in this case, where the property has been destroyed before the completion of the contract or the acceptance of the property by the owner, the loss must fall on the contractor.” Citing Lewing v. Ruttles, 97 N. C., 350; Richardson v. Shaw, 1 Mo. App., 234; Tompkins v. Dudley, 25 N. Y., 272.

The principle is laid down in Appleby v. Meyers, L. R., 2 C. P., 651, wherein it was held that where there is an executory contract of such a nature that the parties contemplate the continued existence of a thing, and the thing is destroyed without fault of either party, and performance of the contract is thereby rendered impossible, no recovery can be had on the contract because it has not been performed, nor can there be recovery for the part performance.

The express language in the contract that the fixtures were to be put up complete and that everything was to be done in accordance with the rules and regulations of the National Board of Underwriters and to Mr. Donaldson’s entire satisfaction, rendered it manifestly impossible for plaintiff below to prove performance; for he was not able to prove that the job was complete, or that all the fixtures were satisfactory, or that all had been installed in accordance with the rules of the National Board of Underwriters. Had the contract been an Ohio one, this alone would defeat recovery (Ashley v. Henahan, 56 Ohio St., 559). And the Kentucky case already alluded to expresses the same principle.

The additional point that we desire to make, however, is that the contract provides for the payment of a lump sum, and that this is conditioned among other things upon everything being done; the ordinary significance of which language is that all the fixtures ordered were to be installed in accordance with said conditions before anything became due, and that all the fixtures were to be satisfactory.

It was shown at the trial below that the fixtures already supplied were up to Donaldson’s expectation, and that he had expressed satisfaction with such as had been furnished; but this could not affect the nature of the contract or the liability thereunder, for plaintiff in error was not bound to pay the lump sum as agreed upon until the entire contract had been performed according to its terms. Andrews v. Durant, 11 N. Y. Ct. App., 35; Clarkson v. Stephens, 106 U. S., 505; Wright v. Tetlow, 99 Mass., 397.

And although Donaldson expressed approval of the fixtures delivered, such expressions on his part could not be made the basis of any different acceptance than that provided for in the contract. Until the whole job was complete and all the fixtures satisfactory, he had the express right to change his mind as to any or every fixture. Ellis v. Mortimer, 1 Bos. & Pull. N. R., 257.

If the contract in question is an Ohio one, the common law rule as laid down in "Wald’s Pollock on Contracts (1 Amer. Ed., p. 363) would obtain, and the loss would be placed on defendant in error. See also Withrow v. Withrow, 16 Ohio, 238; Lumber Co. v. Purdam, 41 Ohio St., 373. And in other cases where it clearly appears that a contract is entered into with reference to the existence of a particular thing which is destroyed before the time for the performance of the contract without the fault of either party, both are excused, and there is no right to recover for part performance or on quantum meruit. Siegel v. Eaton, 165 Ill., 550; Huyett v. Edison Co., 167 Ill., 233; Bishop on Contracts, Section 588; Chitty on Contracts, Section 494; Fildew v. Beasley, 42 Mich., 100.

Defendant in error claims that the sale was a present sale of chattels, and that all the fixtures in their several parts must be taken together to make the whole; that the facts in the instant case are not within the principle of the cases where the subject matter of the contract is necessarily an entire thing— for example, where the subject matter of the contract was a house, or an elevator, or a heating system. In other words it is claimed that because of the very nature of the articles here contracted for, the contract was divisible or severable, and therefore there should be recovery as to such fixtures delivered and accepted.

Color is attempted to be given to this claim because of Donaldson’s alleged acceptance of such fixtures as were already delivered; which we have already said was not the acceptance contemplated by the contract, and therefore it can not be argued that there was any acceptance by Donaldson.

In the next place, it is claimed that the severability of the contract is further indicated because specified prices were set opposite specified articles on the schedule. Bearing in mind that Mr. Donaldson’s acceptance was to pay $875 11 for the whole.” we find in Cockley v. Brucker, 54 Ohio St., 214, 226, that the court say:

“The authorities are to the effect that when the consider at'on is single and entire that the contract is entire, even though the subject of the contract consists of two or more distinct and independent items.”

And in Insurance Co. v. Cohn, 17 C.C., 185, it was said:

“Where several items of personal property are insured in one policy, the amount of insurance for each being severally stated, yet it is one contract of insurance, and when loss occurs several suits to recover the insurance for each item oau not be maintained. A suit on one item insured in such policy is a bar to other suits for the other items. ’ ’

And on page 187 the court say:

“There are a large number of authorities cited to us in the brief of counsel, in addition to which attention is called to the case of Jarrett and Deal v. W. R. Self, 89 N. C. Rep., 478. The first clause of the syllabus' reads:

“ ‘AVhere a single contract is made for furnishing certain specified articles at prices, fixed for each, the plaintiff can not be allowed to split up the account and recover for each item separately.’ ”

The question whether the contract is entire or divisible can not be solved by the application of any fixed legal standard. It depends upon the intention of the parties to be gathered from all circumstances surrounding the agreement and from the face of the contract. If it were of any avail to know what practical construction was placed on the contract by. plaintiff below, we would find that it treated the contract at all times as entire. It never sent in any bill for any individual fixture or or fixtures. In fact, it tendered the remaining fixtures due under the contract before bringing suit. "When payment was refused suit was entered, and no claim was made for part performance or for quantum meruit, but for the entire amount of the contract.

Put we do not think the true test to be the construction placed on the contract by either of the parties, or their conduct'thereunder. That might be of great weight if the contract was ambiguous, but that rule does not apply to unambiguous contracts such as the one before us. Page on Contracts, Section 1127.

The nature of the contract is to be determined from the language employed, so that the question would be, not whether the subject-matter can in fact be severed, but whether the parties intended it to be severed. Morris v. Wibaux, 159 Ill., 627. In that case it was said:

“The entirety of a contract depends upon the intention of the parties, and not on the divisibility of the subject-matter. The severable nature of the latter may often assist in determining the intention, but will not overcome the intent to make an entire contract when that is shown.” Shinn v. Bodine, 60 Pa. St., 182, 185; Easton v. Jones, 193 Pa,. St., 147, 149.

Alfred B. Benedict and L. J. Crawford, for plaintiff in error.

Kramer <& Kramer and Otis H. Fisk, for defendant in error.

The intent in this ease seems very clear. Mr. Donaldson was purchasing an entire lot or system of fixtures for a new house, just as he might have contracted for an, entire heating system. True, it was agreed that in case any one of the fixtures did not come up to the expectations he was to have the right of exchange, but the exercise of that privilege could not have affected his liability to pay the $875. Mr. Donaldson was still bound to take the same number of fixtures contracted for and to pay the specified lump sum. Furthermore, the agreement provided that everything was to be done in accordance with the rules and regulations of the National Board of Underwriters. Such language could not have referred to single fixtures or several fixtures, but unmistakably refers to the fixtures as an entirety — to the entire job. Finally, as already stated, Mr. Donaldson agreed to pay “for the whole” an entire sum. All these considerations would seem to indicate clearly that the parties intended the contract to be entire; and, having so intended, the court could not now make a different contract for the parties, but must carry that intent into effect. Clarkson v. Stephens, supra.

The destruction of the fixtures was a misfortune, and as there was no provision in the contract with reference to the risk, the loss under the authorities must fall on defendant in error. This follows whether the contract be viewed as a Kentucky contract or as an Ohio contract.

We therefore think that the judgment should be reversed and. the verdict set aside and judgment entered up for plaintiff in error.

ITosea, J.

(dissenting).

I am constrained to dissent from the views of the majority.

The facts, as conceded by counsel, are not in dispute, and the sole contention presented to us at the hearing is upon a question of law as a condition of liability.

The Sutherland Company are dealers in gas fixtures. Donaldson, who had about completed a residence near Fort' Thomas, Kentucky, selected the fixtures he desired from the stock and samples of the company, for the various rooms of his house; and a schedule of those, with prices of each .noted, was made the basis of a proposition by the company to furnish and install the fixtures at the aggregated prices, and an acceptance by Donaldson in the words: 1 ‘ Please enter my order * * # as* per list and specifications of this date.”

(It is to be noted that the transaction thus evidenced is not in form and — judged by the expressions employed — not with the intention of a contract for “all or none”; and this is further evident from provisions contained therein permitting Donaldson to return such as he might not desire to retain and be credited with the prices stipulated. The concession of a few odd dollars or cents of the aggregated prices in case he should take all, is too insignificant to be a factor in the consideration).

In the view I take of the case the precise legal nature of the contract is not material; but upon its face it would seem that the parties contemplated an order for specified goods at stipulated prices rather than a contract based on a single consideration and important only in its entirety.

One or two pieces were to be made to order, but it does not appear that the fixtures as a whole were in any way peculiar, characterized by any unity of design or connected in series or in any other relation one with the other. They were, however, to be delivered and installed to Donaldson’s satisfaction. No time limit was fixed but the company proceeded with the delivery and installation room by room from time to time as Donaldson directed, until nearly all fixtures were in place. Donaldson and his wife expressed their entire satisfaction with each fixture as it was installed and again with all that had been installed; and this satisfaction was admitted and emphasized by Donaldson on the stand. When everything was complete except putting in two living room fixtures in the house for which he had not given directions, and one fixture at an exterior driveway, the house burned down and the work installed was destroyed, and at the time of the fire the house was occupied by Donaldson as a residence. The testimony thus shows acceptance and enjoyment of all but the three fixtures, and those three were ready but installation delayed, as appears, by Donaldson himself. The latter fixtures were subsequently tendered and refused.

The defense below in the case is predicated upon the theory that the contract was entire and indivisible; and that, as the subsequent conditions made complete technical performance impossible, no recovery can be had for the part performed.

This position, even upon a contract as claimed, is neither just nor tenable in law. The right to recover under such circumstances is not wholly dependent on the entire or severable nature of the contract, as such, but rather of the subject-matter of the contract. The subject contracted for may indeed be so entire and inseverable that no benefit could accrue to the vendee by the performance of part, but where the contract covers a number of entirely seperate and independent things not physically connected or dependent upon each other, it is manifestly possible fo;r a benefit to be derived from a part performance which involves the delivery and installation of things complete in themselves. The distinction is well illustrated in the following two well considered eases:

In Filden v. Bailey, 42 Mich., 100, it is held that a contractor to build a house can recover nothing if the house be not completed, or, if completed, be destroyed by fire before acceptance by the owner.

In Atlantic, etc., Rwy. v. Construction Co., 98 Va., 503, it is held that if one of several buildings, to be constructed under one entire contract, has been accepted by the owner the contractor may recover for his work if the building be subsequently destroyed by fire before the rest of the contract is performed.

So also, in Barrett v. Coke Co., 51 W. Va., 416, it is held that recovery may be had for goods accepted' under a contract to furnish goods to the satisfaction of the vendee, if the vendor has in good faith attempted to perform, though the amount accepted was much less than the amount contracted for.

The doctrine of incomplete performance as a defense, in a word, applies only to entire contracts in the sense of entire subject-matter and does not apply where the breach goes only to one or more of severable provisions. Page on Contracts, Section 1603.

It would be unconscionable to deprive a vendor or contractor in good faith of a recovery for the benefit enjoyed by the vendee or contractee in the part delivered and accepted. In our own state a luillful or unjustifiable abandonment of the contract or a “willful breach” are held to deprive a party of his recovery even where benefits are conferred. Larkin v. Buck, 11 Ohio St., 551; Ginther v. Schultz, 40 Ohio St., 104; Witherow v. Witherow, 16 Ohio, 238.

But many authorities elsewhere uphold a recovery for benefits accepted and retained even where the breach or failure is willful — and this is said to be the “more modern rule.” McDonough v. Marble Co., 112 Fed. Rep., 3 Page on Contr., Section 1603, and cases cited. See, also, Saunders v. Short, 86 Fed., 225 (C. C. Ap.) ; Watson v. Kirby, 112 Ala., 436.

But the present case presents another reason why the rule denying a recovery for part performance should not apply. Namely, that where, from the nature of the contract it is evident that the parties contracted on the basis of the continued existence of the thing to which it relates, the subsequent perishing of the thing excuses complete performance. Singleton v. Carroll, 6 J. J. Marsh (Ky.), 527; Dexter v. Norton, 47 N. Y., 62; Wells v. Calnan, 107 Mass., 514; Nicol v. Fitch, 115 Mich., 15; Walker v. Tucker, 70 Ills., 527; Gould v. March, 70 Me., 288; McMillan v. Fox, 90 Wisc., 173; Anglo-Egyptian Co. v. Rennie, L. R., 10 C. P., 271; Ross Road Machine Co. v. Forbus, 23 W. L. B., 217. See further, 9 Cyc., 631, and notes.

Thus where one agreed to perform certain work and performs part, and is prevented from performing the residue without fault of either party, he is entitled to pay in proportion to the rate agreed upon for the whole. Hargrave v. Conway, 19 N. J. Equity, 281. This principle is an obviously just one and has been applied by our circuit court in two well reasoned cases. Bailey v. Brown, 9 C. C., 455; Fieke v. Railroad, 5 C. C., 199.

It will be seen from these authorities that the underlying principle is the equitable one of benefits conferred by the part performance. The question of entirety or severability of the contract is not involved excepting as it relates to the subject-matter. If the subject-matter be entire, as for example a building, an elevator in a building, a steam heating plant, or any other thing which has no existence as a useful thing except it be completed as a whole, then, manifestly a part performance is useless to the vendee and confers no benefit; and, consequently, forms no predicate for recovery.

All the cases cited in behalf of the plaintiff in error are of this character; and the rule of Appleby v. Meyers, L. R., 2 C. P., 651, is but the enunciation of a principle recognized and applied from a very early period, namely:

“Where a party by his own contract creates a duty or charge upon himself he bound to make it good notwithstanding any accident by inevitable necessity because he might have provided against it by his contract. ’ ’ Paradine v. Jayne, Aleyn, 26; Platton Covenants, 582.

But the tendency of modern jurisprudence is to recognize the principle we have stated as a limitation upon the above rule.

The Supreme Court of North Carolina said, in commenting on a diversity of opinion that seems to exist only through a failure in some cases to recognize the just distinction:

‘ ‘ On the whole, the weight of opinion and the more reasonable rule would seem to be that where there is a purchase of different articles at the same time, the contract would be severable as to each article, unless the taking of the whole was rendered essential either by the nature of the subject matter or the act of the parties.” Wooten v. Walters, 110 N. C., 251 (256). See, also, Young, etc., Co. v. Wakefield, 121 Mass., 91; Pierson v. Crooks, 115 N.T., 539.

The English courts also recognize substantially the same limitation, namely, that after one party has performed the contract in a substantial part, and the other party has had the benefit of the part performance, the latter may be precluded thereby from relying upon performance of the residue as a condition precedent to his liability. In such case he must perform on his own part and rely on his claim for damages in respect of the defect performance. Leake on Contracts, 664; White v. Beeton, L. R., 10 Q. B., 564; Behn v. Burness, L. J., Q. B., 204; Ellen v. Topp, 6 Exch., 424.

The question here, though technically determined under the law of Kentucky is really one to be decided upon' the general law as it prevails there and elsewhere by the consensus of judicial opinion, and we have so treated it — although, as shown, the courts of Kentucky are in accord with the views expressed, and with that which has been the law of Ohio from early times. Bagley v. Bates, Wright, 705; Ames v. Sloat, Wright, 577; Newman v. McGregor, 5 O., 349 (352).

The recovery (as also upon a quantum meruit) in these cases, however, presupposes a termination of the contract and consequently the liability of a defendant can not be increased by tender of the articles not delivered into his possession prior to the destruction of the building. The verdict and judgment below are erroneous to the extent of the value of the articles tendered subsequent to the fire. Counsel for defendant in error at the hearing offered to remit the amount. Upon this being done, the judgment should be affirmed for the remainder.  