Opinion
6 Div. 645.
November 18, 1926. Rehearing Denied January 6, 1927.
Appeal from Circuit Court, Jefferson County; C. B. Smith, Judge.
Chas. W. Greer and George Frey, both of Birmingham, for appellant.
In order to state a cause of action upon the contract in this case, it is not necessary to allege that the grantee has been ousted by a lienholder or that he has discharged the attachments or liens. 14 R. C. L. 43, 44; 31 C. J. 419, 438; Wicker v. Hoppock, 6 Wall. 94, 18 L.Ed. 752; Stuart v. Carter, 79 W. Va. 92, 90 S.E. 537, L.R.A. 1918D, 1070; N.Y. v. Mechanics' Bank, 130 App. Div. 748, 115 N.Y. S. 769; Wilson v. Hite, 154 Ky. 61, 157 S.W. 42; Anderson v. Washabaugh, 43 Pa. 115; Dickson v. Briggs, 12 Ala. 217; Belmont C. R. Co. v. Smith, 74 Ala. 206. A contract of indemnity should be construed so as to cover all losses, damages, or liabilities to which it reasonably appears to have been the intention of the parties it should apply. 31 C. J. 421, 432, 438; 27 Cyc. 690; Lyman v. Lull, 4 N.H. 497; Florence Oil Co. v. Orman, 19 Colo. App. 79, 73 P. 628; Taliaferro v. Brown, 11 Ala. 709. In pleading fraud it is not necessary to attempt a literal recital of the representations relied on; it is sufficient to state them in substance. 27 C. J. 31; Central L. I. Co. v. Taylor, 164 Ky. 844, 176 S.W. 373; Hays Creek Coal Co. v. Eagle Coal Co., 170 Ky. 323, 185 S.W. 1113. Defendant is not a mere surety; the contract involved is an original and not a collateral undertaking. 31 C. J. 419, 420; U.S. Fidelity Co. v. Bank of Hattiesburg, 128 Miss. 605, 91 So. 344; West. Sur. Co. v. Kelley, 27 S.D. 465, 131 N.W. 808; Texas Fidelity Co. v. General Bonding Co. (Tex.Civ.App.) 184 S.W. 238.
Leader Ullman, of Birmingham, for appellee.
Where the terms are clear and fully ascertained, the contract will be strictly construed for the purpose of confining the damages to the precise terms. Reid v. Stanley, 62 Or. 151, 124 P. 646. There can be no recovery for losses or damages that do not come within the terms of the contract. Wallis v. Carpenter, 110 Mass. 347; Bedford v. Blythe, 74 Miss. 720, 21 So. 919. In suits on ordinary contracts of indemnity, the measure of damages is the loss actually sustained, or the amount actually paid. The indemnitee must minimize his loss. Wicker v. Hoppock, 6 Wall. 94, 18 L.Ed. 752; In re Lathrop (C.C.A.) 216 F. 102; Northern Weld. Co. v. Jordan, 150 Minn. 12, 184 N.W. 39; 15 C. J. 1319. The contract does not extend to losses, damages, or liabilities which are neither expressly within its terms nor of such character as can reasonably be inferred that they were intended to be within the contract. Ridgell v. Dale, 16 Ala. 36; Marshall v. Vicksburg, 15 Wall. 146, 21 L.Ed. 121; Masonic Sav. Bank v. Eschman (Ky.) 37 S.W. 487. The cause of action on an indemnity contract accrues when the liability against which the obligee was to be protected has been fixed and absolute; until such time there can be no recovery against the indemnitor. Central Tr. Co. v. Louisville Tr. Co. (C.C.A.) 100 F. 545; Owens v. Ga. Life Ins. Co., 165 Ky. 507, 177 S.W. 294; Funk v. Church, 132 Iowa, 1, 109 N.W. 286. When the indemnity is against loss or damage, the indemnitee cannot recover until he has made payment or otherwise suffered actual loss. Taliaferro v. Brown, 11 Ala. 702; Maxey v. Rideout (C. C.) 173 F. 172; Hearn v. Lander, 11 Bush (Ky.) 669; Peterson v. Creason, 47 Or. 69, 81 P. 574. Consequential damages are not recoverable. Copeland v. McAdory, 100 Ala. 553, 13 So. 545. Profits on collateral enterprises are too speculative. Blankenship v. Lanier, 212 Ala. 60, 101 So. 763.
Some of the counts of appellant's complaint were in tort, others ex contractu; but this, under the statute, afforded no tenable ground of objection to the complaint, as a whole, since the cause of action alleged in each of the counts arose out of the same subject-matter. Code, § 9467.
The contract, for breach of which the suit is brought, was an original contract of indemnity by which appellee undertook to indemnify appellant, plaintiff, against loss by reason of any liens or incumbrances existing at the time on a certain leasehold estate purchased by appellant from one Rosansky, or by reason of any defect in the title to said leasehold estate which was in existence at the time the parties entered into the contract.
The contract at one place uses the phrase "guarantee the title to said lease," but, in legal effect, it is a contract of indemnity. 31 C. J. 421, 422. This contract should be construed, as contracts in general are construed, to give effect to the intention of the parties, which means that it cannot be extended to losses or damages neither expressly within its terms, nor of such character that it may reasonably be inferred that the parties intended to covenant against them. 31 C. J. 429, 430.
And a declaration as for a breach should clearly show that the contract has been breached. Ridgell v. Dale, 16 Ala. 39. In the present case the complaint should have stated substantially, though with no great particularity, the nature of the liens or incumbrances alleged to have caused loss or damage to the plaintiff. Copeland v. McAdory, 100 Ala. 553, 13 So. 545. Count 1 was deficient in this respect.
Count B was defective in that its allegation of incumbrance on or defect in the title purchased by plaintiff was in the alternative, viz., that Pizitz "owned or claimed to own" a one-fourth interest in the leasehold purchased by plaintiff. Construing the pleading against the pleader, the defect in plaintiff's title was nothing more than that Pizitz claimed to own a one-fourth interest, but a mere idle or unsupported claim did not constitute a lien or incumbrance, within the meaning of the contract of indemnity.
The demurrer to counts 1, 2, C, D, and A-4 was properly sustained for the reason, among others in the case of some of them, that, without alleging that plaintiff had been ousted of possession or that he had otherwise suffered loss or damage by reason of lien, incumbrance, or defect, they sought to recover damages consequential in nature and so remote as not to be recoverable on account of the breaches alleged. Copeland v. McAdory, supra. These counts sought to recover damages because plaintiff lost money which he had paid for his leasehold interest, because payment for the oil issuing from his lease was stopped because he lost a profit at which he would have sold his leasehold, etc. These were consequential damages, not covered by the terms of the contract, and not recoverable in an action thereon. The same may be said of count A-1.
Count A-3 proceeds upon an entirely different theory. It alleges the substance of the agreement in writing and then, irrelevantly as it seems, alleges another agreement, made at the same time and upon consideration that plaintiff would purchase the leasehold, that defendant "would indorse over to and send to the plaintiff all money received in payment of crude oil produced from said lease immediately upon receipt of said checks," that the lease was producing oil which was regularly purchased by the Indian Refining Company, and that defendant failed or refused to indorse or send checks as agreed, but fails to allege that this loss or damage resulted from a breach of the contract of indemnity. But the count shows a promise upon consideration, a breach, and damage. It thus shows a cause of action different from that alleged in other counts of the complaint — and unrelated, except that it may be inferred that, in some way, it arose out of or in connection with the same transaction — and, for aught alleged against it in the demurrer, the count should have been sustained notwithstanding its allegation of superfluous, and, except in the vague way stated above unrelated facts, viz., the facts connected with the contract in writing. Nor does this count of the complaint disclose the fact, as one ground of demurrer seems to assert, that the contract alleged therein was so closely connected with the written contract alleged in other counts as to form part and parcel of it and so to exclude parol proof of it and its attendant facts. Bissell Motor Co. v. Johnson, 210 Ala. 38, 97 So. 49.
Counts 3 and A-5 allege — to state their effect in a general way — that defendant by false and fraudulent representations or concealments induced plaintiff to enter into the written contract of indemnity, and that, relying upon the contract, he made certain large expenditures and suffered certain losses other than expenditures necessary to protect himself against the lien, incumbrances, or defects covered by the indemnity contract, viz., loss of purchase money, loss of receipts from crude oil produced by the leasehold property, and, ultimately, loss of his leasehold, all damages consequential in their nature and too remote to be recovered as the result of a breach of the contract of indemnity. The allegations of fraud did not enlarge the field of recoverable damages, because, in claiming damages for the doing or failing to do the things alleged to have resulted in loss and damage, plaintiff relied upon the written contract of indemnity, the legal effect of the terms of which was to limit his right to recover to such loss and damage as might be caused by a breach of the specific covenant against liens, incumbrances, or defects therein provided against.
The court is of the opinion that count A-2 of the complaint sufficiently states a cause of action as for deceit. It is suggested in appellee's brief that as for aught alleged plaintiff's right under the contract was barred by the statute of limitation or had otherwise been lost to plaintiff prior to the filing of the count. But the statute of limitation must be specially pleaded. The defense cannot be made by demurrer in a court of law. Curry v. Southern Railway, 148 Ala. 59, 42 So. 447. As for the other suggestion, facts cannot be assumed in order to sustain a demurrer. Defendant's suggestions should be brought to the attention of the court by pleas.
The considerations stated above as influencing our opinion against counts 3 and A-5 apply in the main to the case made by count X. In that count, however, another idea appears, viz., that defendant and others conspired by false and fraudulent representations to induce plaintiff to purchase the oil lease from Rosansky, to accept the contract of indemnity against liens, incumbrances, or defects, and an additional promise by defendant that bi-monthly checks, of which Rosansky was then in receipt for crude oil being produced by the leasehold property, would thereafter be delivered to plaintiff, that plaintiff, by reason of his failure to receive the checks and the money represented thereby, was unable to meet payments of purchase money falling due from time to time thereafter, whereby he lost that part of the purchase money previously paid, lost money expended in improving the property, and lost the property itself. But the measure of damages for a default in the payment of money — substantially the case alleged in this count — has in general been limited by the amount of the money lost with interest, any other damage being considered remote, speculative, and unrecoverable. The case here alleged differs from that shown in Bixby-Theirson Lumber Co. v. Evans, 167 Ala. 431, 52 So. 843, 29 L.R.A. (N.S.) 194, 140 Am. St. Rep. 47, where larger damages were held to be recoverable for the breach of a promise, on valuable consideration, to lend money to be used for a special and ulterior purpose known to the promisor. We think this count hardly states a case within the rule of Bissell Motor Co. v. Johnson, supra.
For the error pointed out, viz., the rulings on counts A-2 and A-3, the judgment is reversed.
Reversed and remanded.
ANDERSON, C. J., and GARDNER and MILLER, JJ., concur.