Brilliant Silk Mfg. Co. v. Kaufman, [1925] SCR 249

Supreme Court of Canada

Brilliant Silk Mfg. Co. v. Kaufman, [1925] S.C.R. 249

Date: 1925-02-03

The Brilliant Silk Manufacturing Co., Inc. (Plaintiff) Appellant;

and

J. Kaufman (Defendant) Respondent.

1924: November 21, 24; 1925: February 3.

Present: Anglin C.J.C. and Idington, Duff, Mignault, Newcombe and Rinfret JJ.

ON. APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Sale of goods—Contract price—Increase or decrease—Repudiation—Damages—Price determined or determinable—Art. 1472 C.C.

The respondent, a fur manufacturer in Montreal, bought in December, 1919, from the appellant, a manufacturer of silks in New York, ten pieces of brocade silk as specified to be delivered "as ready." The agreement of sale contained the following clauses: "If at the time of making delivery raw silk has advanced or declined five per cent or more from $12 for Double Extra B. grade, a percentage equal to one-half of this advance or decline shall be added to or deducted from the price. If at the time of making delivery pay-roll and other labour costs have increased or decreased five per cent or more, a percentage equal to one-half of this increase or decrease shall be added to or deducted from the price. This contract ceases to be binding on either party as to goods not shipped by December 31, 1920." The appellant proceeded to manufacture goods ordered, shipped them and sent invoices for same, adding to the contract prices a percentage according to the increase at the date of delivery in the costs of raw silk and labour. The respondent declined to accept such increase; but the appellant insisted upon its interpretation of the contract and continued to make more shipments. On the 20th of March, 1920, the respondent sent written notice to the appellant refusing acceptance of the goods

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and remitting invoices for same. The appellant discontinued producing, but shipped to the respondent the goods in course of being manufactured at that date. On April 15, the respondent returned the goods, which were sold at auction by the appellant on respondent's account, after due notice to him. The appellant then brought action for $3,956.99, being $345.86 for goods retained by respondent, $1,184.85 for difference of price for the returned goods sold at auction and $2,426.28 for damages on the unexecuted part of the contract.

Held, Rinfret J. dissenting, that the terms of the contract must be construed as meaning that it is the percentage of advance or decline in the price chargeable for the complete article which is governed by the advance or decline in the price of material or labour costs and not the percentage of the value of the silk used in manufacturing the quantity of the complete fabric.

Held also that, although repudiation by a party to a contract of sale entitles de facto the other party to recover damages thus incurred, the vendor has the right to insist on preserving the integrity of the contract and to tender the goods for delivery according to the terms of the sale, in which case his claim for damages will be more easily and readily assessed upon refusal to accept by the buyer.

Held further that the appellant had no right to claim damages in respect of loss of profit on the uncompleted part of the contract. Idington J. contra. Rinfret J. dissenting. The contract of sale is not binding upon the parties, as in order to validly stipulate a price based on certain conditions prevailing at the time of delivery the contract must fix the date of such delivery; in other words, a price which can vary at the will of the vendor is not a price " certain et determine " (Art. 1472 C.C.) which is an essential element of the contract of sale.

APPEAL from a decision of the Court of King's Bench, appeal side, province of Quebec, affirming a judgment of the Superior Court and dismissing the appellant's action.

De Witt K.C. and Harold for the appellant.

Dessaulles K.C. and iSt. Jacques for the respondent.

The judgment of the majority of the court (Anglin C.J.C. and Duff, Mignault and Newcombe JJ.) was delivered by

DUFF J.—The radical question in controversy in this appeal concerns the true meaning of two clauses in the agreement between the appellants and the respondent contained in an order signed by the respondent, addressed to the appellants.

The appellants manufacture silks in New York. In November, 1919, one of their travellers, Hanford, called on the respondent, who was a fur manufacturer in Montreal, and there received from him an order for silk brocade, according to samples in his possession. Later, a more formal

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order, containing the stipulations to be considered, was sent by the appellants to the respondent for signature, and was signed by him and returned to the appellants on the 8th of December, 1919. Admittedly the stipulations in question were discussed by the respondent and Hanford, and agreed to by the respondent at the interview in Montreal. These clauses are in the following words:—

If at the time of making delivery raw silk has advanced or declined five per cent or more from $12 for Double Extra B grade, a percentage equal to one-half of this advance or decline shall be added to or deducted from the price.

If at the time of making delivery pay-roll and other labour costs have increased or decreased five per cent, or more, a percentage equal to one-half of this increase shall be added to or deducted from the price.

The appellants proceeded with the manufacture of the goods ordered, and shipments were made on the 7th and 20th of February, 1920, and on the 2nd of March. Invoices covering these shipments were prepared by the appellants, in accordance with their interpretation of the contract, and sent to the respondent; and almost immediately a dispute arose as to the proper method of determining prices under the clauses quoted.

The appellants' procedure may be illustrated by reference to the prices charged in the invoice for the shipment of the 7th of February. On that date raw silk of the grade mentioned in the first of the paragraphs given above was selling at $17.30; that is to say, at an increase of forty-four per cent over the datum price of $12 mentioned in that paragraph; and the labour costs had been advanced approximately twenty per cent. The appellants accordingly added to the prices of the goods furnished a percentage in each case of the price nominated in the contract equal to one-half of forty-four per cent plus one-half of twenty per cent of that price. Thus, brocade of which the price specified in the contract was $5, was charged to the respondent at $6.50, and goods quoted at $3.50 were charged at $4.50. This procedure was repeated in compiling the invoices of the 20th of February and on the 2nd of March.

On the 5th of March the respondent wrote to the appellants, observing that the invoice prices did not correspond with the contract prices, and requested an explanation, and that shipments be discontinued meantime. The appellants replied on the 8th of March, explaining the procedure

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sketched above. On the 10th of March the respondent replied in the following letter:—

Montreal, March 10, 1920.

Messrs. The Brilliant Silk Mfg. Co.,

387 Fourth Avenue,

New York.

Dear Sirs,—In reply to yours of the 8th, wish to state that at the time our Mr. Kaufman gave his order to your Mr. Hanson, Mr. Kaufman understood that the increase would not exceed 5 per cent, if there should be any increase at all.

Probably our Mr. Kaufman has misunderstood, but at any rate, you know fully well that we are not in the raw silk business, and therefore do not understand anything in this line, and cannot be bothered to the learning of this now, nor can we be bothered watching the changing market.

We shall receive the balance of our order at the prices of our original order given to your Mr. Hanson, and at no other prices.

We on our part feel that we are fully justified and more so, in our actions in this matter, and expect that you in turn will act justly; otherwise we shall surely not accept any shipments from you under the circumstances.

Yours very truly,

(Sgd.) J. Kaufman.

Per E.R.H.

P.S.—Kindly note that although the prices increase or decrease, we shall keep to the prices of our original order.

To this letter the appellants rejoined, insisting upon observance of the terms of the contract, and stating that four more pieces were being shipped under it. Again, on the 23rd of. March, 1920, the respondent wrote the appellants in these words:—

In reply to yours of the 18th, would say that my letter to yourselves has been dictated by myself and the substance of which is exactly as I desired and found correct in this matter.

Under the circumstances and for the various reasons already stated in my previous letter, I refuse acceptance of your goods and herewith remit your invoices for same.

Unless you make such shipments as are correct and in accordance to my previous letter, I will, under no means accept any of your shipments.

After receiving this letter the appellants discontinued producing for the respondent confining themselves to completing the pieces then in process of manufacture. Still further correspondence ensued, and on the 20th of March the respondent wrote, expressing his willingness to accept the shipments already made, on the condition that the residue of the order should be cancelled; and to this the appellants replied, declining to cancel the order except on the terms of being reimbursed for their expenses and loss of profit. Finally, on the 6th of April, 1920, the respondent

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wrote to the appellants, declaring that the letter of March 23, quoted above, evinced his final decision.

In the meantime, the appellants had been proceeding with the completion of goods which had been in process of manufacture when the respondent's letter of March 23 was received, and these goods were shipped and invoiced according to the appellants' interpretation of the contract as explained above. Again there was an exchange of letters, and on April 15 the respondent returned the appellants' invoices for goods shipped on the 2nd of March, the 19th of March, the 7th of April and the 13th of April, and informed them that he had advised the express company to return the shipments. The appellants responded that they would receive the goods from the express company, but would hold them at the risk of the respondent, and on the 25th of May the respondent, whom the appellants had up to this time been urging to accept the shipments, was advised by the appellants that they would proceed to sell the rejected goods on the respondent's account, and hold him responsible for their loss on the unexecuted part of the contract. On the 7th of July, the respondent sent to the appellants a cheque for $982.22, in payment for the goods shipped on the 7th and 20th of February, at prices calculated according to the respondent's construction of the clauses in dispute. This cheque was expressed to be in full payment up to date for all claims.

On the 9th of July, the appellants replied, stating that the cheque would be applied in part payment. On the 18th of August, the appellants wrote to the respondent, enclosing a bill for expenses in connection with the rejected goods, stating that they were proceeding to sell them, and that the respondent would be liable for any loss, and for selling expenses, and that as soon as the goods had been sold, a bill would be sent for damages for the respondent's breach of contract in rejecting the tendered goods, and in respect of the uncompleted part of the order. They also asked for a cheque for $348.76, the amount which they stated was still due and unpaid upon the goods shipped on the 7th and 20th of February and accepted by the respondent. On the 30th of August the appellants again wrote to the respondent, making a demand upon him on all these accounts for $2,422.81, with $64.72 interest from the 23rd of March, 1920.

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Obviously, the dispute between the parties centres on the difference between them as to the proper construction of the contract. The clauses quoted deal with two classes of contingency; the first, an advance or decline in the price of raw silk; and the second an advance or decline in "payroll and other labour costs"; and their object is to provide for a variation in the prices nominated in the contract according to a stipulated rule when one of the designated contingencies occur. In the case of raw silk, a datum price of $12 is fixed, and the price of the delivered article is not to be affected unless the decline or fall of the price of that material equals or exceeds five per cent of that sum. When the percentage of advance or decline has passed that point, then to or from the price of the delivered article is to be added or deducted a percentage equal to one-half of this advance or decline.

The key to the meaning of this clause, if any key be required, seems to be in the words "per cent," and "percentage." The language of the clause seems rather evidently to contemplate an advance or reduction of the price chargeable as expressed in or defined by a percentage of something. The variation in the price of the finished article is to be a percentage of something which is determined by this; it is to be "equal to one-half of this advance or decline." "This advance or decline" manifestly is the contingent advance or decline, already referred to, in the price of raw silk, which is conceived as expressed in or defined by a percentage of that price. It seems reasonably clear that the parties are speaking in percentages. One percentage governs another percentage; the second is one-half of the first. The second is a percentage of something; of what? It also seems reasonably clear that this must be a percentage of the price nominated in the contract. Speaking with the greatest possible respect for other views, it is rather difficult to suppose that a plain business man, unsophisticated by learning or dialectics, would attach any other meaning to the words employed. An analysis of the second clause produces a similar result.

This construction of the contract is opposed mainly on the ground that in the result the contract becomes in this view of it extremely unfavourable to the purchaser—to such a degree, indeed, as to lead to the inference that no

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business man of any prudence would enter into such an arrangement. The respondent puts his argument in this way; the prices quoted in the contract are based upon calculated allowances for cost of materials and labour, overhead charges and profit. Admittedly, the element ascribable to overhead charges and profit is no inconsiderable part of the total, and yet, under the appellants' construction, an increase of the price of material or cost of labour produces in determining the price chargeable a proportional increase in this element.

It is not, however, a self-evident proposition that a competent manufacturer would think it unreasonable to augment his profit proportionately with the increase of the cost of material and labour, or even that the allowance in his prices for overhead costs should increase according to the same scale. At all events it seems impossible to affirm that such a procedure as a method of ascertaining prices is so manifestly absurd or unjust as to require the courts to refuse effect to the language of a contract adopting it according to what appears to be the natural and ordinary meaning of its words. But when it is considered that under the contract to be construed the same procedure is also followed in the case of a decline of the cost of material and labour, in which contingency the allowance for profit and overhead charges is proportionately reduced, it becomes apparent that the contention is without cogency.

The view taken by the learned trial judge and urged upon us by the respondent's counsel was that the second percentage, although to be added to the prices named in the contract, is a percentage of the value of the silk used in manufacturing the quantity of the completed fabric, in respect of which the contract price is quoted. Thus, in the case of the $5 quality, for example, it appears that 1.93 ounce of raw silk would be consumed in the manufacture of one yard of this material, which has a value, at the rate of $12 per pound, of about $1.50. On the construction adopted by the learned trial judge and the majority of the court below, the sum to be added to the contract price is a percentage of this sum of $1.50, the value according to the datum price of the material made use of.

It appears to be sufficient to say that there is not a word in the conditions under discussion about the quantity of

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raw silk consumed in the manufacture of the unit quantity of brocade; the stipulations deal with prices and the advance and decline of prices expressed in, percentages, and the natural reading of the language seems to be, as already mentioned, that it is the percentage of advance or decline in the price chargeable for the completed article, which is governed by the advance or decline in the price of material.

It follows that the respondent's refusal of the goods rejected and his refusal further to perform the contract which, as the correspondence already detailed demonstrates, was deliberate as well as intentional, cannot be justified; and that the appellants are entitled to recover for the goods delivered, as well as for non-acceptance of the goods tendered by them; and also damages, if they have suffered any, by reason of this wrongful repudiation.

Admittedly, renunciation by a party to a contract, by the law of Quebec, entitles the other party to recover damages equivalent to the loss he has sustained by reason of the failure of the repudiating party to fulfil his obligation. New England Paper Co. v. Berthiaume[1]; Morgan-Smith v. The Montreal Light, Heat and Power Co.[2]; Langlois v. Ennis[3]. It must be obvious, however, that upon a repudiation by a buyer of his contract to purchase and take delivery of goods in instalments, it is competent to the seller to insist on preserving the integrity of the contract and to tender the goods for delivery according to the terms of sale, in which case, if the buyer refuse to accept, his claim for damages may be more easily and readily assessed. The present appellants, when notified by the respondent, on the 23rd of March, of his repudiation of his obligation under the contract, did not at once treat that repudiation as bringing the contract to an end. They proceeded, as already mentioned, to complete the manufacture of pieces then in process of manufacture, and subsequently tendered them for acceptance to the respondent, and it was only by their letter of the 25th of May that the appellants brought to a termination their attempt to induce the respondent to withdraw from the position he had assumed and accept the goods; and for the

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purposes of this appeal it is on that date, or thereabouts, that the respondent's repudiation must be deemed to have taken effect. The appellants are, no doubt, entitled to recover such damages as they have shown to have arisen from the wrongful determination of the contract by the respondent as at that date. But what are these damages? Owing to the special terms of the contract, it might, in the event, have proved to be a profitable or an unprofitable arrangement, according (inter alia) to the fluctuations of the silk market and the labour market. It is conceivable that evidence might have been produced showing the probable dates at which the unfinished portions of the order would have been delivered which, with the actual records of the prices of silk and the costs of labour during the relevant period, might have enabled a judicial tribunal to arrive at some fair estimate of the appellants' probable loss. But such evidence has not been given. The appellants have based their case upon the theory that they are entitled to recover the amount of their loss, ascertained on the footing of the assumed execution of the unexecuted part of the order on the 23rd of March, which has been taken to be the date upon which the repudiation took effect. Apart from the difficulty arising from the fact already mentioned, that it was not until the 25th of May that the appellants decisively acted upon the letter of the 23rd of March, it is impossible, from the facts in this record, to affirm that damages calculated upon that footing would in fact correspond to the actual loss the appellants have suffered. Indeed, such a conclusion would be nothing better than surmise.

On the record before us, therefore, it is impossible to award damages in respect of loss of profit on the unexecuted part of the contract; and it has been necessary to consider whether an opportunity should be given to the appellants on proper terms to supply the deficiencies in the evidence through a further investigation of the facts. In view of all the circumstances and the course of the litigation, it appears, however, that this is an indulgence which could not with propriety be granted at this stage. The action was begun in December, 1920. The events giving rise to it occurred in the spring of that year. The facts to be considered under this head of the appellants' claim must, in

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no small degree, be facts peculiarly within the knowledge of the appellants. There was a protracted trial, at which the appellants had the fullest opportunity to present their case in the manner which they conceived to be most favourable to themselves, and all the evidence available in support of it. They deliberately elected to rest their claim upon the erroneous theory that they were entitled to be reimbursed as if delivery of the whole order had been completed on the 23rd of March. Probably this course was taken with full realization of the risks involved; and we can hardly assume that at the date of the trial the appellants were not in possession of the facts which would enable them to judge whether it would be worth while to shape their evidence in conformity with another and juster theory as to their legal rights.

Moreover, regard must be had to the point of view of the respondent. In any such investigation he would manifestly be at an appreciable disadvantage, in view of the facts that the decisive evidence must be very largely in the possession of the appellants, and that the facts to be investigated occurred over four years ago.

As to the residue of the appellants' claim, it appears to be well founded. The only element upon which a serious question could arise is that based upon the appellants' right to increase the contract price by reference to the advance of labour costs. As to this, Mr. Frick, the assistant, general manager of the appellants, explained in a general way the method pursued in arriving at the rate of advance; and while it is true that the explanation might have been more precise, it seems clear enough that the real reason why the witness was not more explicit, and the explanation not more complete, is to be found in the lack of desire to pursue the subject au fond on part of the cross-examining counsel, who directed his interrogatories almost exclusively to the object of bringing out the ratio (among the elements constituting the contract price) between the constituents intended to provide for overhead costs and of labour; an investigation which counsel was pursuing with the object of buttressing his argument on the construction of the contract, and by no means unwisely.

The cardinal elements of the calculations of the witness were produced in tabulated form; the payrolls were in the

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possession of the appellants in court, and the fullest opportunity was given for the examination of them by the respondent.

There are two remaining questions which require a brief reference. The first concerns the question of exchange. Since the sums to which the appellants were entitled as prices for goods delivered under the contract or tendered for delivery were payable in New York, they were payable at the figure named in New York funds; and damages should therefore be calculated according to the rate of exchange ruling on the respective dates when such sums would have been paid in New York if the terms of the contract had been observed. In re British American Continental Bank Ltd.[4].

The other point concerns the contention advanced and accepted by the learned trial judge, that the cheque of the 7th of July, 1920, having been expressed to be in full payment to date for all claims,

and having been accepted and cashed in that form, the appellants are concluded from asserting a claim for any larger sum in respect of the deliveries of the 7th and 20th of February.

The appellants made it quite clear by their letter, written on the receipt of the cheque, on the 9th of July, that they declined to accept the condition, and that letter appears to leave no room for doubt that this contention cannot prevail.

The rule laid down in Day v. McLea[5], has been adopted and given effect to in the Province of Quebec, first in a decision of La Compagnie Paquet v. Paquin[6], and more recently in Royal Trust v. White[7], when such a condition is indorsed upon or inserted in the body of the cheque, it is a question of fact in each case whether the creditor has, by words or by conduct, agreed to that condition.

It is assumed that the parties will be able to agree upon the sums due in respect of exchange, as well as the amount payable for interest under the express terms of the contract. In addition to these two items, the appellants are

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entitled to judgment for the sum claimed in respect of goods delivered and tendered for delivery, $1,184.85. They are entitled to four-fifths of the costs of the action and of both appeals.

Should the parties be unable to agree as to the sums due in respect of exchange and interest, the points of disagreement may be mentioned.

Idington J,—The appellant is a corporation manufacturing silks in New York city. The respondent is a fur manufacturer in the city of Montreal.

The appellant's agent solicited from the respondent an order for silk brocade to be manufactured by appellant, and got same which he forwarded to appellant; and the latter drew up, in its printed form, one of its usual forms of contract at the time, and specified therein and thereby the contract conformable with said order, which was dated 28th November, 1920, and executed by both parties hereto.

The contract provided for the purchase by respondent from appellant of ten pieces of brocade silk, each piece to be sixty yards in length and thirty-six inches in width, and each to be of a different colour and a variation in prices, as specified, and to be delivered when manufactured but not later than the 31st. December, 1921.

Three of the kinds specified were sold at the price of $5 a yard; two of the kinds specified were sold at $4.50 a yard; two of the kinds specified were sold at $4 a yard, and three others of the kinds specified were sold at $3.50 a yard.

There was set forth in the said contract the following provision for increase or reduction of the prices named:—

If at the time of making delivery pay-roll and other labour costs have five per cent, or more from $12 for Double Extra B. grade, a percentage equal to one-half of this advance or decline shall be added to or deducted from the price.

If at the time of making delivery pay-roll and other labout costs have increased or decreased five per cent or more, a percentage equal to one-half of this increase or decrease shall be added to or deducted from the price.

There seems to have ensued much pretence on the part of the respondent of his having misunderstood these two paragraphs, which seem to me very clear and plain. I submit, with great respect for the learned trial judge and a majority of the Court of King's Bench, that they got

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possessed of a rather confusing conception of what is expressed thereby.

Mr. Justice Tellier, who wrote a dissenting opinion in the appellate court, seems to me to have correctly appreciated the true intent and meaning of said provisions for varying the prices named.

Mr. Justice Flynn also dissented but did not write. As he dissented I assume he probably had taken the same view as Mr. Justice Tellier.

At the time when said contract was entered into the prices of many kinds of goods and labour were liable to sudden changes in the market.

The market price of raw silk was evidently assumed to be $12 for double extra B grade at the time of making the contract.

And the pay-roll and other labour cost was liable to change up or down between the date of signing the contract and the date of delivery.

If these variations did not exceed five per cent no change was to be made in the price, but if they were such as to exceed in either direction five per cent, then the price of the goods so sold must vary accordingly to the extent of a percentage of half the increase or decrease. Surely nothing could be fairer if carried out honestly.

There were two deliveries in February, 1920, and one on the 2nd of March, 1920, before the invoices therefor, made on the basis of such variation, were objected to.

On the 5th of March, 1920, the respondent wrote the appellant manufacturers in New York that the prices quoted in the invoice, covering said shipments, did not correspond with the prices of the contract; and asking them to stop further shipments until explanation made for such change.

To that appellant wrote as follows:—

New York, March 8, 1920.

Mr. J. Kaufman,

944 St. Lawrence Boulevard,

Montreal, Canada.

Dear sir,—Answering your letter of March 5, 1920, the price of raw silk on February 7, 1920, was $16.80, an advance of 40 per cent and labour costs had advanced 20 per cent which under the terms of the contract would average 30 per cent over the basic price of $5 which would make no. 3396 $6.50 and no. 3384 basic price $3.50, $4.55 as charged.

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On February 20, 1920, raw silk was $16.25 and the average increase was 28 per cent, making the $3.50 goods at $4.48; we charged same at $4.47½.

We trust this explanation is entirely satisfactory and we are making shipment to-day of goods just received from the mill, on the basis of $15 for raw silk.

Yours very truly,

The Brilliant Silk Mfg. Co. Inc.,

Pel J. B. Whitney,

Manager.

The respondent's letter in reply thereto was as follows:—

Montreal, March 10, 1920.

Messrs. The Brilliant Silk Mfg. Co.,

387 Fourth Avenue,

New York.

Dear sirs,—In reply to yours of the 8th, we wish to state that at the time our Mr. Kaufman gave his order to your Mr. Hanson, Mr. Kaufman understood that the increase would not exceed 5 per cent, if there should be any increase at all.

Probably our Mr. Kaufman has misunderstood, but at any rate, you know fully well that we are not in the raw silk business, and therefore do not understand anything in this line, and cannot be bothered to the learning of this now, nor can we be bothered watching the changing market.

We shall receive the balance of our order at the prices of our original order given to your Mr. Hanson, and at no other prices.

We on our part feel that we are fully justified and more so, in our actions in this matter, and expect that you in turn will act justly; otherwise we shall surely not accept any shipments from you under the circumstances.

Yours very truly,

J. Kaufman,

per E. R. H.

P.S.—Kindly note that although the prices increase or decrease, we shall keep to the prices of our original order prices.

This clearly indicates an intention on the part of respondent to repudiate his contract. But as a matter of prudence and to make that repudiation clear beyond doubt, the appellant wrote to him, on the 18th of March, 1920, insisting that the contract must govern, and concluded by saying that four more pieces of the goods as ordered were being shipped according to the contract.

This shipment was made accordingly and an invoice sent therefor based on the terms of the contract according to the appellant's contention of its clear meaning, and showing, by the percentages given therein, the way in which the net amount was arrived at.

On the 23rd of March, 1920, the respondent replied to appellant as follows:—

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'Messrs. The Brilliant Silk Mfg. Co.,

387 Fourth Avenue,

New York.

Dear sirs,—In reply to yours of the 18th, would say that my letter to yourselves had been dictated by myself and the substance of which is exactly as I desired and found correct in this matter.

Under the circumstances and for the various reasons already stated in my previous letter, I refuse acceptance of your goods and herewith remit your invoices for same.

Unless you make such shipments as are correct and in accordance to my previous letter, I will, under no means accept any of your shipments.

Yours truly,

J. Kaufman.

He returned the invoices therewith and, as soon as received, returned the goods to appellant, and, thereby, I submit, there is clear evidence of repudiation of the contract and such an anticipatory breach of the same as to entitle appellant to bring this action and to recover the damages as claimed herein.

The appellant replied and insisted upon the respondent carrying out his contract.

A number of letters passed between the parties after this, for the appellant seemed to have imagined that it could persuade the respondent of the folly he was committing in taking the stand he had done.

The respondent simply defied the appellant and no useful purpose is to be served by repeating the later correspondence here.

The goods so returned were sold at auction, after due notice to respondent, and for all the losses incidental thereto, and the necessary expenses, the respondent is, in my opinion, liable.

These and all other items for damages for breach of the contract based on the situation thus created as of the date of 23rd of March, 1920, as claimed and I think, proven herein, the appellant is entitled to, as well as the balance due for the goods retained by the respondent on the prices determined by the terms of the contract as claimed and proven by the appellant, and that including the item of exchange on the draft sent in Canadian currency by the respondent.

Clearly as the payment had to be made in New York and the rate of exchange was at the time of payment against Canada, the respondent as to that item should make it good.

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The damages should bear interest from the said date of the breach; but, as I understand, there is practically no difference now in the rate of exchange between here and New York; that item must not enter further into the estimate of damages.

The appeal should be allowed with costs throughout and judgment entered for the amount of $3,956.99, and interest thereon from said breach of contract on March 23, 1920. I cannot see my way to allowing the 10 per cent claimed thereon. Indeed I may, for want of direct evidence on the point, err in allowing the items of difference in exchange on drafts before breach of contract, but there is slight incidental evidence relative to a notorious condition of things well known, that stands on a different footing from that which the learned trial judge ruled out.

I was, at the argument, inclined to think that inasmuch as the price of silk, and possibly of labour, was for the balance of the year 1920, in a falling condition, the application of the rule of law requiring damages to be assessed as of the date of the breach might possibly be modified, but, on reflection, I am quite clear that there is no room for such modification in this case, if ever in any.

The market price differences between the date of the contract and the respective deliveries of goods, only provide for appellant's protection to the extent of one-half the rises beyond the prices stated in the contract, and we have heard nothing to shew that the fall was such as to reduce same below the prices fixed by the contract.

If there is any serious doubt as to proof of the percentage of rise in either prices of silk, or labour relative to the manufacture of the goods in question, I am inclined to hear and consider any argument tending to entitle the reconsideration thereof. I should be inclined, if on hearing it any serious doubt raised as to the correctness of the result, to give the opportunity of a reference as to such facts as determine the result on the basis of the construction I have put on the contract, but, of course, only at the risk of respondent, in any event, paying the costs of such reference.

At present the course pursued by respondent seems to me not to entitle him thereto, but he and his counsel seem to me to have been so obsessed with their own construction of the contract that possibly they paid no proper attention to

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learning the facts as to the market price of either silk or labour, at the respective dates in question.

Rinfret J. (dissenting).—Appellant's traveller, Mr. Walter M. Hanford, came to Montreal and, on the 26th November, 1919, took from the respondent an order for thirty-four pieces of silk brocade of different colours and patterns at prices varying from $3.50 to $5 per yard, delivery to be made as follows; a few pieces as early as possible; balance as ready; no goods after December 31, 1920.

Hanford sent to the appellant, whose head office is in New York, a memorandum of the order. With this memorandum, the appellant prepared a contract in printed form and addressed it to the respondent in Montreal requesting him to sign a slip in confirmation of the contract, then tear it off and mail it to the appellant. This was done by the respondent in Montreal.

It follows that the contract between the parties was completed in Montreal and must be governed by the law of the province of Quebec.

This contract contained the following stipulation as to price:—

If, at the time of making delivery, raw silk has advanced or declined 5 per cent or more from $12 for double extra B grade, a percentage equal to one-half of this advance or decline shall be added to or deducted from the price.

If, at the time of making delivery, pay-roll and other labour costs have increased or decreased 5 per cent or more, a percentage equal to one-half of this increase or decrease shall be added to or deducted from the price.

As soon as the appellant began to forward the first pieces of silk which were ready and invoiced them according to its method of calculation, the respondent at once complained that the prices asked by the appellant were not in conformity with the contract. In the correspondence which ensued it became apparent that the parties were not at one mind on the construction to be put upon the clauses quoted; and, as they found themselves unable to agree, by its letter of the 25th of May, 1920, the appellant abandoned its attempts at compelling the respondent to accept the goods at the prices invoiced and brought the contract to its termination, subject to the right of claiming all amounts due on the goods already manufactured and shipped and also of sending

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a bill for its expenses and loss of the profit on the unfinished portion of the order.

By that time, two shipments, respectively on the 7th and 20th of February, 1920, had been received by respondent, although accepted by him at prices calculated in accordance with his interpretation of the contract. For these, on the latter basis, the respondent sent to the appellant, on the 7th July, a cheque drawn for $982.22, but marked "with New York funds" (and accordingly representing an amount of $1,116.65 in Canadian money), which the appellant accepted on account.

Four other shipments had been made by the appellant on the 2nd and 19th of March, the 7th and 13th of April, but refused by the respondent, because the appellant persisted in asking for them prices which, in respondent's view, were not called for by the contract. Whereupon, the appellant had notified the express company to return the goods and had advised the respondent that, when this was done, it would take them at respondent's risk and proceed to sell them for respondent's account.

The goods thus returned were later sold at auction at prices inferior to those asked by the appellant from the respondent, and, in this action, the former now claims the difference, with certain express charges in addition.

The balance alleged to be due on the goods shipped on the 7th and 20th of February which were received and kept by the respondent, the difference between the proceeds of the auction sale and the price claimed for the pieces of silk shipped on the four dates already mentioned in March and April, and the damages on the uncompleted part of the contract make up the sum of $3,956.99, for which the appellant sues the respondent, with interest from March 23rd, 1920, and a further sum to represent the rate of exchange between Montreal and New York funds.

The litigation centres on the two clauses already recited.

It should first be noted that, under these clauses, the price of each piece of silk is left to be determined by "the time of making delivery," since it is according to the market value of raw silk and the cost of labour on that date alone that the "percentage" which forms the element of variation is to be established. The actual cost of raw silk or of labour to the appellant is immaterial; and,

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notwithstanding the fact that a yard of silk brocade goes through several and different processes such as winding, quilling, warping, twisting, weaving, picking, cleaning, throwing and dyeing, which must necessarily take place at different dates (when labour might well have gone up or down), it does not matter, under this ingenious contract, what the price of such labour was on the particular date when it was actually done; but it is the rate prevailing on the day of delivery which is to govern.

Now there is nothing in the contract to fix the date of delivery. It is left at the will of the appellant. And it is rather apparent, by the record, that the price might be affected appreciably by the withholding of delivery for even one day. The price itself therefore is not fixed by the contract but is left in the hands of the vendor. To quote the trial judge:—

The price of raw silk varies from date to date, and * * * it would enable plaintiff to choose a date of delivery when raw silk was at its highest price independently of what it might have actually cost,

I do not think that such a contract is legal or binding under the law of Quebec—and I say that quite independently of any element of fraud.

Under this law (Art. 1472 C.C.) it is essential to the existence of a contract of sale that the price should be either determined or determinable; but it must be determinable according to fixed conditions and may not be allowed to vary at the will or the caprice of the vendor.

Le prix (says Pothier ed. Bugnet, vol. 3, no. 23), qui est de l'essence d'un contrat de vente, doit être un prix certain et déterminé. Il n'est pas néanmoins nécessaire qu'il soit absolument déterminé: il suffit qu'il soit tel qu'il doive le devenir et qu'il ne soit pas laissé au pouvoir seul de l'une des parties.

The same principle is expounded in Carpentier & du Saint, Répertoire du Droit Français, vo. Vente, no. 664:—

Aux termes de l'art. 1591, "le prix de la vente doit être déterminé et désigné par les parties." Pour déterminer le prix, les parties peuvent adopter le mode qu'elles jugent convenable; mais il faut que ce mode les lie l'une à l'autre, car il n'y a pas de vente tant que la fixation du prix dépend de la volonté de l'une d'elles.

He refers to D. 1889, 2.62: Baudry-Lacantinerie & L. Saignat, no. 132; Planiol, t. 2, no. 1376.

In the case of Ville de Biarritz v. Broquedis[8], it was held:—

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Un contrat de vente est nul lorsque les parties ne sont pas d'accord sur le prix et que la fixation de ce prix est laissée à l'arbitraire de l'une des parties contractantes.

A quotation from Planiol (loc. cit.) is unnecessary as it adds nothing to the proposition of Carpentier & du Saint; but the reference to Baudry-Lacantinerie is important:—

132. * * * Les parties peuvent d'ailleurs adopter tel mode de détermination du prix qu'elles jugent convenable, pourvu qu'elles soient liées l'une et l'autre par le mode de détermination qui a été convenu : car il n'y a pas de vente tant que la fixation du prix dépend encore de la volonté de l'une des parties.

Ainsi, au lieu de déterminer le prix en fixant le chiffre même les parties peuvent le désigner en se référant à un fait qui ne dépende de la volonté ni de l'une ni de l'autre pourvu que ce fait en procure la détermination précise: on pourra, par exemple, vendre un immeuble pour le prix pour lequel le vendeur l'a lui-même acheté; s'il s'agit de choses ayant un cours, on peut les vendre au cours du jour de la vente ou de tel autre jour indiqué. (Aubry & Rau IV, paragraphe 349, p. 388; Guillouard, Vente et échange. I.N.109: Huc, Comm. du Code civil, X, n. 36).

Huc. (vol. X, n. 36) says:—

Donc il n'y a pas vente quand la fixation du prix est au pouvoir du vendeur seul ou de l'acheteur, car dans ce cas il n'y a pas encore consentement ni lien de droit. Mais le prix est déterminé, quoique le montant ne soit pas encore connu des parties au moment du contrat, s'il n'est plus au pouvoir de l'une d'elles de l'augmenter ou de le diminuer.

And Laurent, (3e éd., vol. 24, no. 73) :—

L'article 1591 veut que le prix soit déterminé par les parties. Cela veut dire que le consentement des deux parties doit porter sur le prix, comme sur la chose qui est l'objet de la vente. C'est un principe élémentaire qu'il n'y a point de prix si le vendeur s'en rapporte à la discrétion de l'acheteur ou si l'acheteur déclare qu'il paiera ce que le vendeur voudra; ce n'est pas là un concours de volonté, c'est la volonté d'une seule des parties; il en résulte qu'il n'y a pas de consentement sur le prix.

He had already said at No. 72:—

Mais si le prix est indéterminé et incertain, quand même il ne le serait que dans l'un de ses éléments, on doit dire qu'il n'y a pas de prix, et partant il n'y a pas de vente.

It follows from this doctrine that the parties herein could validly stipulate a price based on certain conditions prevailing "at the time of making delivery" only if such time had not been left, as here, at the choice of the vendor. The appellant, in the present case, must make delivery "as ready," but is not obliged, nor can he be compelled to be ready at any time before the 31st December, 1920.

Quoting again from Pothier—Bugnet Vol. 3) :—

16. La seconde chose requise pour former un contrat de vente, est qu'il y ait un prix convenu entre les parties: sine preto nulla venditio est. * * *

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17. Le prix nécessaire pour former un contrat de vente doit avoir trois qualités: 1. Il doit être un prix sérieux; 2. certain et déterminé, ou du moins qui doive se déterminer; 3. il doit consister en une somme d'argent.

In my humble opinion, a price which can vary at the will of the vendor, as in this case, is not that price "certain et déterminé," which is an essential element of the contract of sale. The consequence is that, lacking such essential element, the contract here nulla venditio est.

For that reason alone, the appellant had no standing before our courts on the agreement which he tried to have enforced. His only right was for the payment, on the basis of quantum meruit, of the goods received and kept by respondent. The action was not taken on that basis; but, the plea having alleged the bad quality of the goods, the parties had opportunity of submitting their evidence in that respect sufficiently to obviate the necessity of reopening the enquête or of reserving the right of the appellant to recover, for the value of the goods actually delivered, any amount in excess of what has already been paid.

There is however, in my view of the case, yet another difficulty standing in the way of the appellant.

It is a rule derived from Pothier that:—

On doit dans les conventions, rechercher quelle a été la commune intention des parties contractantes, plutôt que de s'arrêter au sens littéral des termes,

which has been embodied in Art. 1013 of the Civil Code thus:—

1013. When the meaning of the parties in a contract is doubtful, their common intention must be determined by interpretation rather than by an adherence to the literal meaning of the words of the contract.

With due respect, I am inclined to the opinion that there never existed between the parties a "commune intention" as to the method by which the price was to be determined. This is not a case of error; but one where the minds of the contracting parties have failed to meet, the consequence being that there was no completed contract.

The trial judge has submitted the problem in this way:—

The plaintiff's contention is that the percentage of increase in raw silk and labour must be added together, divided by two, and then applied to the price of the finished product.

It seems to us that the fair and reasonable interpretation of this clause is that half of the percentage of increase in the price of raw silk should be applied to the quantity of raw silk going into a yard of manufactured silk, and one-half the percentage in the increase of labour should be applied to the actual amount of labour, exclusive of profit and overhead expenses, required to make up a yard of finished product.

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The contrary view is expressed by Mr. Justice Tellier, in his dissenting judgment in the Court of King's Bench, thus:—

Après avoir pris connaissance du dossier, étudié soigneusement la clause dont il s'agit, et même conféré ou discuté avec quelques-uns de mes collègues du Banc, il m'est impossible de trouver que la dite clause a le sens que la Cour supérieure lui a donné. Je suis d'avis, au contraire, que c'est la demanderesse qui a raison. Du moment que la hausse de la soie brute s'élevait à 44 pour cent, à la date de la livraison, la demanderesse avait le droit d'ajouter au prix de $5 fixé dans le contrat un percentage égal à la moitié de cette hausse, c'est-à-dire un percentage de 22 pour cent. Il lui était également loisible d'ajouter au dit prix de $5 un autre percentage égal à la moitié de la hausse du coût de la main-d'oeuvre. Or, c'est là précisément ce qu'elle a fait. Le défendeur a donc eu tort de s'opposer à l'augmentation et de faire obstacle à l'exécution pleine et entière du contrat.

Now, the latter scale of advance of the price cannot, I submit, have been within the contemplation of the buyer—(I am assuming that the vendor knew what he was at, when he drafted the clause)—and, when such effect as suggested by Mr. Justice Tellier does not necessarily follow from the language used, I am constrained to the view that there is lacking in the present case the "commune intention" without which it is impossible to find that "les deux volontés se sont rencontrées" and which is essential to the formation of the contract.

Le consentement (says Laurent vol. 24-no. 6, at p. 11), doit intervenir sur le prix. Si l'un entend vendre pour une somme plus grande que celle pour laquelle l'autre consent d'acheter, il n'y a pas de contrat de vente, faute de consentement; c'est un contrat inexistant, c'est le néant. Pothier, vol. 3, no. 36.

Sir François Lemieux, Chief Justice of the Superior Court of the province of Quebec, in Martineau v. Plante[9], quotes the above passage from Laurent and adds (p. 105):

Le prix est donc une condition de l'existence de la vente. Or, si le consentement des parties fait défaut sur un prix déterminé et désigné par les parties, ou s'il n'y a pas de concours de consentement sur le prix, il n'y a pas de vente. Les deux parties n'ont pas concouru dans le prix: l'un a cru vendre pour un prix élevé et l'acheteur a cru acheter pour un prix moindre. Les parties ont donc été en désaccord sur le prix et ce désaccord empêche la vente.

The result herein is aptly expressed in the following passage of the reasons for judgment of the Chief Justice of the Court of King's Bench:—

Tout d'abord, le prix de vente * * * étant indéterminé, comme les parties ne pourraient s'entendre sur le mode de procéder pour faire cette détermination, il s'en est suivi qu'il n'y a pas d'accord de volonté sur un

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élément essentiel du contrat, à savoir: le prix; et que, sans prix, il n'y a pas de vente, et, par conséquent, pas de contrat entre les parties dont l'exécution pouvait être exigée; et, par conséquent, pas d'action.

See Belaud v. The Quebec Southern Railway Company[10], where Mr. Justice Lamothe, afterwards Chief ; Justice of the province of Quebec, says:—

Quand un doute raisonnable existe sur la question de l'existence du consentement de l'une des parties, une cour de justice doit décider que ce consentement n'existe pas et ne peut être mis à effet.

However, magis ut valeant quam ut pereant. Assuming therefore that the contract was valid and binding, and following the guidance of Sir Montague Smith in McConnel v. Murphy[11], "in questions of difficult interpretation," I would, with the greatest respect, think that the "true construction" is that of the trial judge, with whom the majority of the Court of King's Bench concurred.

Such construction, in the judgment of Mr. Justice Duclos, is thus stated:—

In our opinion, this clause means that the percentage of increase in raw silk should be applied to the value of the raw silk used in one yard; and the percentage in actual labour, exclusive of profits and overhead expenses, should be applied to the actual cost of such labour, and one-half of this percentage of increase should be added to the price.

The disputed clause has not acquired any recognized meaning in the province of Quebec, nor even in Montreal; and the proper construction to be placed upon it cannot be gathered from usage under the rule laid down in article 1016 of the Civil Code.

Even in the United States, it is not a standard clause. Mr. W. R. Frick, the assistant general manager of the appellant in New York, tells us:—

I don't know that anybody else has it.

Such a clause is not known in the silk trade, for Mr. Reynolds, general manager of the Belding-Corticelli Ltd., large silk manufacturers of Montreal, testifies:—

Well, it is very hard to tell just what the meaning of that contract is. It gives two specific items and says that in case of either of those items changing there would be a change in the price. Now it says "if at the time of making delivery raw silk has advanced or declined 5 per cent for double extra B grade the quantity equal to one-half of this shall be added to the price." It is very hard to state what was in the minds of the men who drew up this contract, whether they were adding that percentage to the total cost of the goods, or whether they were adding it only to the raw silk, which is the item that is specified in the paragraph.

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Then, on the other hand, the second paragraph says that "if the payroll and other labour costs have increased or decreased 5 per cent a percentage equal to one-half of this increase or decrease shall be added to or deducted from the price." Now, I don't know whether they meant they are going to add or decrease this total price of the goods, or whether they are speaking only of adding this item to the labour cost. They mention labour cost and they mention the raw silk.

Now, if the interpretation of the minority of the Court of King's Bench be adopted, "by reason of this stipulation," as indicated by the trial judge, the plaintiff could add 30 per cent to its profits and to all its overhead expenses, merely because the value of raw silk and the labour costs have advanced from the basic price stated or assumed in the contract.

This is put very clearly and forcibly by Mr. Hope, an accountant called by respondent:—

The invoices which were sent by the plaintiffs to Kaufman do not show any basis for the increased prices so that Kaufman would not be able to estimate what he ought to pay on those invoices, and I find that subsequently in the claim for damages filed by the plaintiff that there are two very manifest errors in figuring.

In the first place, he takes, according to the evidence of Mr. Frick that I saw there, he says he takes the increase of silk at 44 per cent and the increase of labour at 17 per cent, he adds the two together and divides them by two, and increases the basic selling price of say $5 by that one half, which is 30 per cent. That is manifestly wrong.

Just to give you an illustration of how that would work out, taking Exhibit P.-29, items 1, 2, 3, and 4, showing the saving of labour and silk costs. Add those items together. You will find that the total silk is $1,838.56 and the total labour cost $993.70: in other words, the silk is twice too much if you divide your percentage into two. You are manifestly overcharging the defendant on your increased prices. I have no intention of interpreting the contract, but since a $5 quality is given as the base price and you put on this extra 30 per cent, if you get away from the condition of extra silk and extra labour on that $5, you are also paying that extra per cent on the overhead and profit that might be in the basic price.

It is not meant to pretend that the latter proposition is unreasonable; but it does not seem to be the intention which the reading of the clause in question naturally conveys.

Many a contract, even calling for deliveries spread, throughout one year, stipulates a fixed price, calculated, by the parties on conditions as they exist at the date of the contract. If such conditions change, in course of performance, one or the other of the contracting parties stands to lose or to gain thereby. It is only natural that the appellant and the respondent herein should have been willing

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to share in the risk attending such a contingency; but it would seem that the usual way of providing against it was to stipulate for an increase or decrease in that portion of the price representing the elements of cost which were likely to vary. The two most important of those elements of cost—if not the only ones—were raw silk and labour. Both parties wished to be protected; and, for that reason, they agreed to a variation of the price based on half the increase or decrease of the value of raw silk or labour as it existed on the date of the contract. But there was no apparent reason why the overhead expenses and the profits should be greater or smaller in proportion to the increase or decrease in value of the raw materials and, it would not appear to be what the parties intended to contract for.

Of course, the stipulation is expressed in percentages. But, as the trial judge says:

There is a wide difference between adding the percentage to this price, and applying the percentage to the said price;

and, at all events, the percentage must always be converted into a sum and that sum be afterwards added to the price.

Therefore, whether you apply the percentage only to the basic cost of raw silk and labour or whether you apply it to the price of the finished article, you add none the less to the price, in each case, a sum resulting from the calculation of a percentage. You add it to the price stipulated in the contract and the language of the clause is satisfied.

So that, for the purpose of confirming the judgment a quo, it is not necessary that one construction only should be possible. It is sufficient that the clause should be at least equally susceptible of the construction placed upon it by the trial judge and the majority of the Court of King's Bench, bearing in mind always that the rule of article 1013 of the Civil Code is that the "commune intention" of the contracting parties should be arrived at by interpretation rather than by the literal meaning of the words used. And, most respectfully, it would seem that such interpretation leads to the conclusion that it is a sum produced by applying the percentage to the amount included for raw silk and labour, which is to be added to the price stipulated for the finished article, and

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not a percentage of the total price of the finished article by which such price is to be increased.

In the latter case the price is augmented by a percentage of the price itself. In the first instance it is augmented only by a percentage of the value of raw silk and labour. That is what the courts below have held the clause to mean and with such a construction I agree.

It might, at all events, be conceded that a clause, such as this, is ambiguous and equivocal. This would flow from the evidence of MM. Reynolds and Hope already quoted and the difference of opinion in the Court of King's Bench. It took the appellant two continuous days of enquête and the filing of numerous exhibits to establish the price according to his view. Apparently it is wanting in that element of certainty or of clearness as would meet with the requirements of the law.

And I fail to see, under such circumstances, why the respondent should not have the benefit of the principle which was the recognized rule as early as the time of Ulpian, and is expressed in Dantoine, 46:—

Lorsqu'il y a de Tobscurite au fait.dont il e'agit, on doit prendre le parti le plus doux, c'est-à-dire qu'il faut reduire la disposition au plus petit point où elle puisse aller.

This principle is the seventh rule laid down by Pothier (Traité des Obligations, Bugnet, vol. 2, no. 97):—

Dans le doute, une clause doit s'interpréter contre celui qui a stipulé quelque chose, et à la décharge de celui qui a contracté l'obligation;

and article 1019 of the Civil Code reproduces it practically verbatim.

Ambiguitas contra stipulatorem est, and Demolombe (vol. 25, p. 29) is authority for the proposition that article 1019 C.C. applies equally to the lessor or to the vendor and that it is against them that obscure or ambiguous stipulations must be construed.

However that may be, it is well established jurisprudence in Quebec (Rooney v. Fair[12]; Consolidated Car Heating Co. v. Came[13]; Canada Glue Co. v. Galibert[14]; Canestrari v. Lecavalier[15]; Guay v. Provident Accident & Guarantee Co.[16]; Desjardins v. Great West Life Assur. Co.[17]; that, in case of doubt, the contract is interpreted

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against him who has prepared or drafted it or, in the present case, the appellant.

By that rule, the judgments below have been guided:—

Si le contrat tel que rédigé par le vendeur (says Chief Justice Lafontaine), est tellement obscur qu'il soit difficile de le comprendre et qu'il soit susceptible de deux interprétations, le doute est contre lui; et c'est le sens imposant la moindre obligation qu'il faut prendre, suivant la règle: id quod minimum sequimur.

I have, for the above reasons, reached the conclusion that the appeal should be dismissed, with costs.

I think there has never existed herein a valid and complete contract of sale, on account of the absence in it of the legal requirements with regard to the price. As for the two shipments of silk brocade received and kept by the respondent, the record does not warrant a reference back for the purpose of establishing quantum valebat, and I am satisfied on the evidence that the cheque sent by the respondent was sufficient to fully indemnify the appellant.

On the other hand, I would at least concur with the trial judge and the majority of the Court of Bang's Bench in construing the contract against the appellant. Upon such interpretation, there follows that the appellant has sought to overcharge the respondent; he has refused to carry out the contract according to its terms; and the respondent was justified in the stand which he has taken.

Appeal allowed with costs.

Solicitors for the appellant: DeWitt, Howard & Harold.

Solicitors for the respondent: Dessaulles, Garneau, Désy & St. Jacques.