other six, four held that only the question of damages can properly be made to depend, as a condition precedent, upon the award of an arbitrator, while two held that the award may be made to include all matters of dispute growing out of the contract, which it seems to us must be regarded as equivalent to saying that no action at law or in equity shall be brought to determine any controversy growing out of the contract, which all the judges agree is a void stipulation. We therefore feel compelled to adopt the view that upon principle, and the fair balance of authority, such a stipulation, in regard to estimating labor or damages, under a contract for construction, is valid, and may be treated as a condition precedent, but that beyond that, the present inclination of the English courts is to hold that it is repugnant to sound policy, and subversive of the legal obligation of the contract, as being equivalent to a stipulation that no action at law shall be brought upon the contract, but only upon the award, if not paid.

9. But the balance of authority in this country seems to be in favor of allowing such a condition precedent, in this class of contracts, to extend to the quality of the work, as well as the quantity, and to the question, whether the work is progressing with sufficient rapidity, and whether the company on that account are justified in putting an end to the contract. It seems reasonable to us, on many grounds, that contracts of this magnitude and character should receive a somewhat different interpretation in this respect from that which is applied to the ordinary commercial transactions of the country, as has been held in regard to pecuniary penalties.10 We should not therefore feel justified in intimating any desire to see the American cases on this subject qualified.

the engines and tender should be subject to the performance of

10 Ante, §§ 116, 117.

one thousand miles, with proper loads, the manufacturers to be liable for any breakage which may occur through defect of materials or workmanship, but not where it occurs from collision, neglect, or mismanagement of the company's servants, or any other cause, except the two first named. The trial to take place within one month from the day on which any engine is reported ready to start, in default of which the manufacturers to be released from all responsibility. It was specially agreed the fireboxes should be of copper, 7-10ths of an inch thick. One of the engines, so supplied, performed the thousand miles according to the contract, but some months after the fire-box burst, when it was discovered that the copper was reduced to 3-16ths of an inch in thickness, it being conceded it was originally of the thickness required by the contract. In an action for the price of the engine, which by the contract was to be paid upon the satisfactory completion of the trial, it was held the defendants could not give evidence of such defect in the copper, no fraud being alleged, and that, by the terms of the contract, the three months' trial having been satisfactory, released the manufacturers from all responsibility in respect of bad materials and workmanship.1

2. In a contract for railway sleepers,2 it was stipulated that the plaintiff below should supply the defendant below with 350,000 sleepers, the contract before having recited that the defendants were desirous of being supplied with that number of railway sleepers. The contract specified that the plaintiffs were willing to supply them according to a specification and tender, which stated that the number of sleepers required was 350,000, that one-half would have to be delivered in 1847, and the remainder by midsummer, 1848; and the contract also contained a covenant to supply the sleepers within the time specified, "as, and when, and in such quantities, and in such manner," as the engineer of the company by orders in writing, "from time to time or at any time, within the time limited by the specification, should require." The deed also contained a provision, that the engineer might vary the time of delivery, that the company should retain in their hands £2,000 as security for the performance of the contract, and should pay it over within two months after the sleepers had been delivered, and

Sharp v. The Great Western Railw., 2 Railw. C. 722; s. c. 9 M. & W. 7.

2 The Great Northern Railw. v. Harrison, 14 Eng. L. & Eq. 189, 12 C. B. 576, in the Exchequer Chamber, from the C. P.; s. c. 8 Eng. L. & Eq. 469, 11 C. B. 815.

that the contract might be determined upon the default or bankruptcy of the plaintiffs.

3. It was held that there was an implied covenant on the part of the company to take the whole number of 350,000 sleepers. That an order by the engineer was a condition precedent to any delivery of the sleepers by the plaintiffs; That the company were bound to cause such order to be given within the time limited by the specification; That although the engineer had power to alter the time for the delivery of the sleepers, such power was to be exercised within the period limited by the specification; That the engineer, as to matters in which he had a discretion, e. g. as to varying the time of delivery of the sleepers, stood in the position of arbitrator between the parties, but as to giving the order for the delivery he was a mere agent of the company; The only legitimate rule of construction is to ascertain the meaning from the language used in the instrument, coupled with such facts as are admissible in evidence, to aid its explanation. — Per Parke, B.

4. It has been held, also, in a contract with a railway company to deliver iron, " near the months of July and August," and the delivery continuing till the 25th of October, and the company not objecting to receive it, that they were bound by the* terms of the contract, one of which was that they were to give their notes for each parcel of iron as it was shipped.3

5. So, too, under the English statute, which provides that the directors of a railway company may contract by parol, on behalf of the company, where private persons may make a valid parol contract, it was held, where the agent of the company agreed by parol with the plaintiff to purchase of him a quantity of railway sleepers upon certain terms, the sleepers being delivered and used by the company, that they were liable.5

3 Bailey v. The Western Vermont Railw., 18 Barb. 112. It was also held, here, that the refusal of the company to give their notes, as stipulated, excused the plaintiff from delivering or tendering the remainder of the iron, until the company should tender their notes, and entitled plaintiff to sue presently. 48 and 9 Vict. c. 16.

Paulding v. London & North W. Railw., 8 Exch. 867; s. c. 22 Eng. L. & Eq. 560. The contract was made by the engineer's clerk, who was also clerk of the company, but there was evidence of the assent of the committee. Lowe v. London & North W. Railw., 18 Q. B. 632; s. c. 14 Eng. L. & Eq. 18.

* 439

SECTION XVII.

Contract to Pay in the Stock of the Company.

1. Breach of such contract generally entitles the party to recover the nominal value of

stock.

2. But if the party have not strictly performed on his part, can only recover market value.

3.

Cash portion overpaid, will only reduce stock portion dollar for dollar.

n. 2. Lawful incumbrance on company's property, will not excuse contractor from accepting stock.

§ 121. 1. In many contracts for construction, the whole or a portion of the price is stipulated to be paid in the stock of the company, as the work progresses, at certain stages, or when it is completed. The time, place, and mode of payment in such cases, will be the same ordinarily as in other contracts for payment of stock. If the company refuse or neglect to deliver the stock or the proper certificates when it becomes due, upon proper request or opportunity, they are generally liable, it is considered, as in other cases of failure to perform contracts, for a certain amount or value, in collateral articles expressed in currency.1

*2. But it was held, that where the plaintiff recovered a balance due on equitable grounds, and not on the ground of strict and full performance of the contract, he was precluded on like equitable grounds from recovering more for the stock portion of the contract than its market value at the commencement of the action.2

1 Moore v. Hudson River Railw., 12 Barb. 156. It was held, in this case, that where a portion of the price of construction was payable in stock, at par, within thirty days after the completion of the contract, the company were not bound to make any tender of the stock, as in case of contracts for specific articles. But that it was a payment in depreciated currency, and no tender necessary. In a recent English case, Re Alexandra Park Co., 12 Jur. N. S. 482, where the contractor stipulated to accept a portion of his pay in stock, at the election of the company, it was held he was not bound by such an election after the company was ordered to be wound up as insolvent, as the shares thereby become extinguished.

2 Barker v. T. & R. Railw., 27 Vt. 766. In this case the court say: "If the defendants have, upon reasonable request, declined paying the amount due, in their stock, as stipulated, it would seem but reasonable they should pay the amount in money.

"1. This is the general rule in regard to contracts payable in collateral articles, estimated in currency, and not delivered.

"2. The stock of a corporation is but a certificate of such a sum being due

3. So, too, where the work is to be paid partly in stock and partly in money, if the money part be overpaid, even by doing a the bearer. And when the party stipulated to pay in his own paper, if he refuse, suit may be brought immediately, although the paper was to have been on time, if given. But it was never supposed the party could reduce the recovery, by showing his paper depreciated in the market. This would be virtually giving the difference to the other stockholders. This would be the rule which should be applied if defendants are wilfully in fault. If it were the stock of another company, no doubt, all which could be recovered is the value of the stock in the market. Certainly, this is the general rule in regard to stock. And, perhaps, that rule should be applied to the stock of the defendants, if it appears they have not wilfully and unreasonably refused to deliver the stock. Ante, § 38. "But the recovery here is not allowed upon strictly legal grounds, upon the strict and literal performance of the contract on the part of the plaintiffs. It is rather upon equitable grounds that any recovery and apportionment of the contract is allowed for any thing less than full performance. By the terms of the contract the defendants had a right to retain the tenth part reserved until full performance. And, although it has not been regarded as a strict condition precedent in some of the cases (Danville Bridge Co. v. Pomeroy, 15 Penn. St. 151), still it is a stipulation in the contract, for the full performance of which the defendants had the right to insist, and for doing which they are not to be themselves regarded as in fault. The defendants, too, were justified in refusing to pay any deficiency in the work at the time of the demand; so that while we excuse the plaintiffs from full performance of their contract, as a strict condition precedent, and allow them to recover to the extent of what they had done, on the equitable ground that they had in good faith attempted to fulfil their undertaking, and supposed they had done so, and only failed by mistake and misapprehension, which should not, under the contract, defeat the recovery in toto, but only subject it to an equitable deduction for all damage sustained by defendants, it seems to us that it should form a part of this equity to the defendants, not to be required to pay more for this stock, even if it were their own, than it was in fact worth, or could have been made to benefit the plaintiffs.

"As we now hold, the plaintiffs were, at the time of the demand, entitled to recover, upon equitable grounds, a sum less than the whole price. But they demanded the whole price, and the defendants refused. The demand itself was unreasonable. Is it certain a reasonable one would have met a similar fate? It has been held the demand must be reasonable, to render the refusal unreasonable. Jameson v. Ware, 6 Vt. 610. As, therefore, the refusal of defendants seems to have been not altogether without good excuse, and in allowing an equitable recovery, in a case like the present, one of the first requirements seems to be, that no injustice shall be thereby visited upon defendants, it would almost necessarily follow that we should not suffer the plaintiffs to recover more for the work really done by them than they could possibly have realized if they had been paid at the time, according to the contract. And, as we set up a basis of recovery upon equitable grounds, and one not contemplated in the contract, we should not visit the defendants with a judgment which will make them worse off than if they had been allowed to pay the sum found to be