Pengra v. Wheeler

Mr. Justice Moore

delivered the opinion of the court:

1. The defendant contends that the court erred in allowing plaintiff interest on the installments of rent. In Hawley v. Dawson, 16 Or. 344 ( 18 Pac. Rep. 592 ), it was held that when the amount of recovery is unliquidated, and there is no express agreement to pay interest, default in the payment does not occur till the amount which the party ought to pay is fixed and made certain. In the *536 case at bar, while the contract provided that the rent should be one thousand dollars per year, payable quarterly, it also provided that in default of a sufficient supply of water from any cause a pro rata portion of the accruing water rents should be forfeited. This provision would render the amount of rent due under the contract dependent upon the supply of water for each quarter, and hence the amount of rent, in case of an insufficient supply, would be unliquidated; and since the contract made no provision for the payment of interest, it could not be recovered until the amount of rent which the defendant ought to have paid had been fixed and made certain. Section 3587, Hill’s Code, provides that “The rate of interest in this state shall be eight per centum per annum, and no more, on all moneys after the same become due; on judgments and decrees for the payment of money; on money received to the- use of another and retained beyond a reasonable time without the owner’s consent, express or implied, or on money due upon the settlement of matured accounts from the day the balance is ascertained,” etc. The contract having provided that the rent should be paid quarter-yearly, under this section interest must be allowed from the end of each quarter on deferred payments, except in case of an offset, in which case interest can be recovered only from the time that the balance due can be made certain.

2. The record shows that the defendant sold and delivered goods to the plaintiff, paid out money for his use and benefit, and made repairs on the leased premises. Would this make the account mutual between them? Mutual accounts are made up of matters of set-off. There must be a mutual credit founded on a subsisting debt on the other side, or an agreement, express or implied, for a set-off of mutual debts: Angel, Limitations, § 149. “Accounts are mutual when each party makes charges against the other in his books, for property sold, services rendered, or *537 money advanced”: Edmonstone v. Thompson, 15 Wend. 554 . “ The mode of settling mutual accounts involves the examination of the same by the parties, and the arrival at an understanding of the amount remaining due from the one party to the other as an adjustment thereof. It becomes a settlement, and in such cases only is interest allowed to run”: Catlin v. Knott, 2 Or. 321 . The rent on one side of the account, while payable in money, did not destroy the mutuality when set-offs were made on the other: Catling v. Skoulding, 6 Term. R. 189. There was no account due the plaintiff, so as to draw interest under the statute, until the balance was ascertained (Waterman, Set-off, § 19), and the allowance of interest to either party was error.

3. The record further shows that upon an accounting with the Springfield Investment Company on the thirteenth of Juñe, 1891, there was found to be due from the defendant to said company the sum of three hundred and thirteen dollars and thirteen cents on account of rent, which account was assigned to plaintiff, and that one A. E. Gallagher, having an account against plaintiff amounting to one hundred and fifty dollars and forty-five cents, assigned the same to defendant. These accounts did not arise between the plaintiff and defendant and were not therefore mutual; and since the assignors could have recovered interest thereon from the time they became due, the court properly allowed interest on each.

4. The defendant contends that the court erred in not considering his claim for the loss occasioned through plaintiff’s failure to repair the dam and race within ten days from the time the water had fallen to an average winter stage, the findings of the court not covering the issues upon that question. It is alleged in the answer that the water receded to an ordinary winter stage on or about the fifteenth of February, and that from said date to and including the twenty-fifth of said month, and for some time thereafter, the water was continuously at or below said *538 stage; and that from the twenty-fifth of February to the third of May the water was at or below the ordinary stage nearly all the time. These allegations were specifically denied in the reply, but there was no allegation therein that plaintiff had been prevented by an act of God from completing the repairs within tile agreed time. Upon this issue the court found that the water did not recede to an average winter stage on or about the fifteenth of February; that the plaintiff, as soon as it had receded, commenced to repair the injury and thereafter worked diligently until it was completed; and that defendant was not injured through any fault or negligence of the plaintiff in failing to repair; and by an amended finding states that “It is difficult to determine from the evidence in this case when the water did recede to an ordinary winter stage after the third day of February, 1890. The evidence does not show that said river receded to an average winter stage and remain at or below that stage for ten consecutive days before the third day of May, 1890.” These findings impliedly admit that the water receded to the proper stage at some time prior to the third of May, but do not appear to have been based upon any issue made by the pleadings. It would appear from such findings that, in consequence of a rise in the river after the water had fallen to the required stage, plaintiff had been precluded from making the repairs. The material issue was whether from the fifteenth to the twenty-fifth day of February, 1890, and for some time thereafter, the water was continuously down to or below an average and ordinary winter stage. The findings are silent as to the time the water receded, and it does not appear therefrom whether or not the water was continuously or at all down to an ordinary winter stage between said dates. The law is well settled in this state that when a cause is tried by the court without the intervention of a jury there must be findings of fact upon all the material issues presented by the pleadings: Drainage *539 District v. Crow, 20 Or. 535 ( 26 Pac. Rep. 845 ). There being no finding upon this issue, it must be presumed that it escaped the attention of the court. If the repairs were made within ten days after the water had fallen to the required stage defendant has no cause of action on his claim for damages; or, if the finding was to that effect, and there was any evidence to support it, this court would not review such finding.

5. Admitting that a sudden rise of the river after it had fallen to the proper stage had prevented the plaintiff from making the repairs within the given time, and this fact were an issue in the cause, is the plaintiff liable for a breach of the conditions of his covenant caused by the act of God? It is a well recognized principle of law that when it is apparent that the parties have contracted on the basis of the continued existence of a given thing, then, on performance becoming due, if, without the fault of the parties, the thing has ceased to exist, the case has become one of mutual mistake, and the duty to perform no longer remains: Bishop, Contracts, § 588; Chitty, Contracts, § 1070. The contract in the case at bar relates to the lease of the water power. The injury to the dams and race was not a destruction of the power which continued to exist after the flood. The dams and race were incidents of the power and were to control it, but they did not constitute the power, and hence their destruction or injury did not affect the continued existence of the power. If the stream had, in consequence of drought, failed to furnish the neceesary amount of water to operate defendant’s mills, this would have been a destruction of the subject matter of the contract which would have excused performance. The theory that when a party by his own contract creates a duty or charge upon himself, he is bound to make it good if he may, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract, had its origin in the dictum of the court in Paradine v. Jane, *540 Aleyn 26, and this rule is not infrequently applied where the impediment comes from the act of God. But the actual adjudications, while discordant, come far short of this; so that, as a whole, this dictum is not sustained by them: Bishop, Contracts, § 590. “It is,” says Mr. Justice Swayne, “ a well settled rule of law, that if a party by his contract charge himself with an obligation possible to be performed, he must make it good, unless its performance is rendered impossible by the act of God, the law, or the other party. Unforseen difficulties, however great, will not excuse him”: Dermott v. Jones, 2 Wall. 1 . The act of God will dispense with the performance of a contract, but to bring the case within the rule of dispensation, it must appear that the thing to be done cannot by any means be accomplished; for, if it is only improbable, or out of the power of the obligor, it is not in law deemed impossible: Beebe v. Johnson, 19 Wend. 500 ( 32 Am. Dec. 578 ). The plaintiff having agreed to make the repairs within ten days from the time the water had fallen to an average winter stage, cannot justify the failure to comply with this requirement if the water continued at or below that stage, by saying that the work could not profitably have been done within the agreed time, since by the employment of more labor the repairs might have been completed within the time. This would have been within the power of the plaintiff, and, therefore, not impossible; but if, after the water had fallen to the required stage it immediately rose and continued high for some time, this would have been such a dispensation as would have rendered the performance of the contract impossible. If one engages to make repairs before a particular day, and it becomes impossible by the act of God to make them by that day, he will not be liable for a breach of the covenant, if he repairs as soon as possible thereafter: Taylor, Landlord and Tenant, § 361.

6. If the plaintiff had intended to rely upon the act of God as a dispensation, he should have alleged this fact *541 and made it an issue (Bailey on Onus Probandi, 296), but this he may be able to do in another trial by amendment if he so desire.

7. The plaintiff contends that the parties have stipulated for the amount of damages, and hence they are bound thereby. The contract provides that in default of a sufficient supply of water from any cause, the lessor shall forfeit a pro rata portion of the water rents accruing thereunder during the time such deficiency exists. “Whenever,” says Mr. Sedgwick, “the damages were evidently the subject of calculation and adjustment between the parties, and a certain sum was agreed upon and intended as compensation, and is in fact reasonable in amount, it will be allowed by the court as liquidated damages”: Sedgwick, Damages (8th Ed.), § 405. The contract provides that plaintiff shall furnish a given quantity of power for a certain sum of money, and stipulates that in default thereof from any cause, the defendant shall only pay for what he obtained. Can it be said from this that the damages had been the subject of calculation and adjustment between the parties? That the parties did not anticipate such an unusual freshet in the river when the contract was executed is inferable from the fact that plaintiff agreed to make the repairs within the given time, and this fact alone would seem to rebut the theory that the damages had been the subject of calculation and adjustment in advance of the injury, or that the sum named had been agreed upon and intended as compensation. The evidence shows that the rental value of defendant’s mill was from twenty dollars to twenty-five dollars per day, and that without the use of the water power it was valueless, while the rent of the water power was only three dollars per day by the terms of the contract. In Fisher v. Barrett, 4 Cush. 381 , the defendants had leased to the plaintiff a part of their mill, and covenanted to make additions to the machinery, and furnish steam power to *542 operate the same. It was further agreed that in default of a supply of steam power, the rent should be suspended. Defendants’ neglected to make the additions, and refused to furnish the power. In an action for damages the defendants plead that the suspension of the rent was intended to be liquidated damages for the breach of the covenant, and that they were not liable for any other damages. The court held that the damages had not been liquidated. In that case the plaintiff’s damages were the result of the defendants’ refusal to furnish the motive power. The damages could not have been less had they arisen from inevitable accident. The injury to plaintiff’s business was the measure of his damage, and not the motive with which the defendants refused to furnish the power. This was equivalent to holding that a suspension of the rent was not a reasonable compensation for the damages sustained. , It would appear from this that the forfeiture of the rent in the case at bar was not a reasonable compensation for the loss of the use of the mills.

The judgment of the court below is reversed and a new trial ordered. Reversed.