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sory note for $100 to B in payment of the debt. A is not liable to C. “A man cannot, of his own will, pay another man's debt without his consent and thereby convert himself into a creditor.” 1
100. A contracts with B to sing in B's opera house for three months for $5,000. C induces A to break his contract with B and sing in C's opera house during this term. C is liable to B for the damages to him resulting from A's breach of contract.
101. A employs B to transport a cargo of tea from Canton to San Francisco. B employs C to transport the cargo. A is not liable to C. The contract between A and B confers no rights upon C because he is not a party to it; nor does the contract between B and C impose any liability upon A for a similar reason.
102. Water Company A contracts with the city of B to supply it with water for extinguishing fires. The Water Company commits a breach of its contract as a result of which breach, C, a citizen of B, has his house destroyed by fire. C has no redress against the Water Company because he is not a party to the contract.2
103. A and B form a partnership. The articles provide that if either partner die his widow shall receive a certain annuity from the business for a period of five years from her husband's death. A dies. His widow may recover the annuity because the articles of partnership created a trust in her favor.
104. A agrees to name his son after B in consideration that B pay the son $500 when the latter reaches his majority. A names his son after B. The son may look to B for the $500 when he reaches his majority. Here the blood relation between A and his son takes the place of the duty which the promisee must owe the beneficiary.
105. A owes B $100. A loans C $100 upon his promise to repay the amount to B in payment of A's debt; B may sue C for the amount. 1 Becker v. Waterworks Co., 79 Ia. 419, 44 N. W. R. 694. 2 Durnford v. Messiter, 5 Maule & S. 446.
106. A and B are partners. A contract is entered into by A, B and C whereby C takes B's place in the firm, C agreeing to assume B’s firm obligations. The firm creditors may sue A and C, instead of A and B, on the firm debts.
112. Interpretation of contracts: rules of evidence.When a contract is reduced to writing the document itself is the best evidence of its contents; and, as a rule, oral testimony is inadmissible to prove them. Nor is it permissible to add to or contradict the terms of the writing by any oral testimony. This restriction is due to the fact that the parties to the contract are presumed to have embodied their final conclusions in the written document.
For some purposes, however, oral testimony is allowed. Thus, it is admissible to explain abbreviations, ambiguous words and phrases; to identify the subject matter of the contract and the parties to it; to show surrounding circumstances, usage or custom, a condition precedent, fraud or illegality, delivery, a mistake of expression and a subsequent oral agreement.
When the contract is not within the statute of frauds, and the written part is not complete, there may be oral testimony to supplement the written part. Such testimony is also admissible to show the connection between several documents which make up the contract.
113. Rules of construction. In the interpretation of contracts the object sought is the intention of the parties, and in determining this intention certain rules of construction are applicable. Some of these rules are general, while others are merely subsidiary.
The principal general rules of construction are the following:
1. Words are to be given their plain and ordinary meaning, unless the context or surrounding circumstances show an intention to use them in a peculiar
2. In determining the intention of the parties the agreement is to be construed as a whole.
3. That construction should obtain which will best carry out the intention of the parties.
Among the subsidiary rules applicable to the interpretation of contracts are the following:
1. In the case of a conflict between written and printed words the former will govern.
2. Words are to be construed more strictly against the party using them.
3. Where words or clauses are repugnant to each other, those which are in conflict with the manifest intention of the parties should be rejected as surplusage.
4. Where a contract is ambiguous, and one interpretation renders it valid and the other invalid, the former
5. Where one interpretation renders a contract reasonable, and another unreasonable, the former will govern.
6. Subsequent acts of the parties, not contrary to rules of law, or the expressed terms of the contract, are entitled to strong consideration.
7. Obvious errors of grammar are subject to correction.
8. Words of general meaning are subject to restriction by words of a more specific character.
114. Surrounding circumstances given consideration. -It has previously been stated that the object sought in the interpretation of a contract is the intention of the parties. Where there is doubt as to the intention the court will look beyond the words of the contract and take into consideration the surrounding circumstances. Thus, it will consider the relation of the parties, the nature of the subject matter, the object the parties had in view, etc. In order to prove these facts, oral evidence may be admitted.
115. Matters implied by law.—The court also will take into consideration unexpressed obligations naturally inherent in the transaction and which are implied by law. Thus, in a contract of sale certain implied warranties are imported into it by implication of law. (See section 182 et seq.)
116. Time of the essence of the contract.—At common law, time is of the essence of a contract. If one of the parties fails to perform his obligation within the time agreed upon the other party is discharged from his obligation. In equity, however, the rule is otherwise, unless the parties expressly agree that time is of the essence, and even then the court will not enforce such an agreement if to do so would be unconscionable. By statute, in England and in some of the states of this country, the common law rule has been modified so as to be in harmony with that adopted in equity.
117. Liquidated damages, or a penalty?—The parties to a contract may agree that in case of a breach the one committing the breach shall pay to the other a certain sum as liquidated damages. If, however, the sum agreed upon is to be in the nature of a penalty the court will not enforce it. Even the fact that the
parties use the very words “liquidated damages” does not change the rule. But if they call it a penalty when in fact it is liquidated damages it will be interpreted as liquidated damages. In other words, what the sum is called is immaterial. In fact, some courts hold that the intention of the parties, as regards its nature, is immaterial. In a Michigan case the question was decided as follows: “Not what the parties intended, but whether the sum is, in fact, in the nature of a penalty; and this is to be determined by the magnitude of the sum, in connection with the subject-matter and not at all by the words or the understanding of the parties. The intention of the parties cannot alter it.” 1 Other courts have decided that the intention of the parties controls, and still others hold that “The intention is not at all controlling, for in some cases the subject-matter and surroundings of the contract will control the intention where equity absolutely demands it.” 3
118. Joint and several contracts.-- Where there are several persons on one or both sides of a contract the question arises whether or not the rights and liabilities of the parties are joint or several.
With respect to their rights, an eminent authority says:
A contract will be construed to be joint or several, according to the interests of the parties, if the words are capable of that construction, or even if not inconsistent with it. If the words are ambiguous, or will admit of it, the contract will be joint if the interest be joint, and it will be several if the interest be several. But a contract entered into with several persons, in respect of the same matter or interest, cannot by any words be made so as to entitle them both jointly and severally.
With respect to their liabilities, the following rules govern: Where the promise is plural in form the liability is prima facie joint; and where the promise is singular in form the liability is prima facie several. But, in either case, where the context, or the surrounding
1 Jaquith v. Hudson, 5 Mich. 123. 2 Garst v. Harris, 177 Mass. 72, 58 N. E. R. 174. 3 Streeper v. Williams, 48 Pa. 450.