Central Oil Co. v. Southern Refining Co.

HENSHAW, J.

Plaintiff and defendant entered into a contract whereby plaintiff agreed to deliver to defendant oil produced from plaintiff’s wells, as follows: “from sixty thousand (60,000) to one hundred eight thousand (108,000) barrels of forty-two (42) gallons each, to be delivered as ordered by second party (Southern Refining Company), within one year from the first day of July, 1904, provided that not less than five thousand (5,000) nor more than nine thousand (9,000) barrels shall be delivered in any month during the term of this contract. . . . This contract shall commence with the 1st day of July, 1904, and continue monthly thereafter for the period of one year and the violation of any of the terms or conditions thereof by either party hereto shall work a forfeiture thereof, and this agreement shall thereupon become void and of no effect.”

Plaintiff sued for damages for breach of this contract, the breach consisting in the failure and refusal of defendant to take the oil in accordance with the terms of the contract. The court found the breach and awarded damages based upon the difference between the contract price of the oil and the market price of oil at plaintiff’s wells for the months during which defendant refused to take plaintiff’s product.

Upon appeal appellant’s first and principal contention is that by force of the terms of the contract itself, when defendant violated it, the agreement became “void and of no effect”; that this provision means that the violation terminated the contract and that consequently plaintiff had no right of recovery under it. Clearly appellant misconstrues the force of the language upon which it relies. That language means that by a violation of the terms of the contract the rights of the party violating it cease, and as to that party and to that extent, the

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agreement becomes void and of no effect. It would be an extraordinarily unreasonable construction to give tbe language the meaning for which appellant contends. It would work the destruction of the contract itself and leave this solemn writing as an expression of the mere whim of the parties, for “a promise which is made conditional upon the will of the promisor is generally of no value, for one who promises to do a thing only if it pleases him to do it, is not bound to perform it at all.” (9 Cyc. of L. & P., p. 618.) Performance by the party not in fault is always excused by the wrongful refusal to perform by the other party. The rights of the party in fault come to an end, but the contract is nevertheless kept in force so as to protect the rights of the innocent party and to enforce the obligations of the delinquent party. (Civ. Code, secs. 1511, 1512, 1514.) Such has uniformly been the construction put upon language such as this when found in contracts.