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courts was invoked, it seems to us that it ITN ERROR to the District Court of the


United States for the District of Porto the payment of interest as in an ordinary Rico, to review a judgment in favor of case.

plaintiff in a suit to recover for services in Rule discharged. Petition denied.

lighting the street lamps in the city of San Juan, in that island. Reversed.

(195 U. S. 510)

Statement by Mr. Justice White: CITY OF SAN JUAN, Piff. in Err.,

The gas company, defendant in error, an V.

English corporation, sued the city of San ST. JOHN'S GAS COMPANY, Limited.

Juan, the plaintiff in error, to recover $14,

600.60, alleged to be due for services in Contractsmedium of payment-accord and lighting 485 street lamps from November,

satisfaction-refusal of requested instruc- 1899, to September 16, 1900. Annexed to tionsharmless error-effect of general the petition was an account showing the charge.

items from which the balance resulted. The

city generally denied, and pleaded that, un1. References in a contract for street light- der the contract for lighting, it had at va

ing to the sums due thereunder as to be rious times imposed fines upon the company paid in currency, without any qualification, for neglect of its contract duty, which fines cannot be permitted to counterbalance the

were a set-off, and extinguished the sum showing which the prior negotiations and the context of the contract itself otherwise sued for. A statement of account was also makes, that current foreign money was to be filed by the city, showing the alleged set-off. the medium of payment.

Both the accounts credited the gas company 2. Error in instructing the jury that the time for lighting with $15,125.70. In the ac

of making the contract for lighting the street count of the gas company, that company lamps in San Juan, Porto Rico, was alone credited itself with several small items for to be considered in determining the current foreign money which the contract provided labor and materials supplied to, and matewas to be the medium of payment, is not rials appropriated by, the city, aggregating prejudicial, where it is conceded that, if $246.42, and for interest calculated at 12 current foreign money was required by the per cent up to September 16, 1901, the items contract, money of the United States current in question and the interest amounting to at the time the contract was made was within the contemplation of the parties, and $2,215.96, making the total credited to the that such money was also current in the is company $17,588.08. These sums were not land at the time when performance was due. in the account of the city. Whilst the credit

An accord and satisfaction results from the items in both accounts, therefore, agreed exreceipt, under protest, in discharge of a par-cept as above stated, there was this further ticular payment, of a different money medium difference: The account of the gas company from that which was required by a constated that the sums to its credit were pay.

tract. 4. An agreement that payment in United able in gold or United States money; whilst

States currency should extinguish a larger the account of the city stated such items as amount due under a street-lighting contract payable in Porto Rican currency, declared estimated in Porto Rican currency is bind to be worth 40 per cent less than United ing where there was a bona fide dispute be- States gold or currency. The gas company tween the parties as to the medium of pay-debited itself with various payments made ment, the municipality insisting that it was Porto Rican money, and the lighting com- to it by the city on account of the services pany that it was current foreign money. rendered and for the sum of a certain

Error in refusing to instruct the jury that ground rent, all amounting to $2,987.42, parties who differed as to the medium of leaving in its favor the balance sued for. payment under a contract would be bound The city's account, whilst debiting the comby a stipulation, by way of compromise, to extinguish, by a payment in United States pany with payments in United States gold currency, a larger amount due under the to the amount stated in the gas company's contract, estimated in Porto Rican currency, account, treated the debt as being due in is not cured by instructing the jury, in the Porto Rican currency, and figured the paygeneral charge, that the compromise evi- ments in gold as extinguishing a larger denced by the agreement must be treated as amount by 40 per cent than the face value of inefficacious as to the particular items to which it related unless it was found that the gold. In addition the gas company was the minds of the parties had met on an en. debited with certain fines imposed and other tirely new and independent contract.

charges, and was moreover debited in Porto

Rican money with two sums aggregating (No. 41.]

$8,836.88, amounting, if paid in gold, to

$5,332.13. These two debits, it was recited Argued and submitted November 3, 1904. in the account, were the sums in Porto Decided December 12, 1904.

Rican money or its equivalent in gold, which


the city was bound to pay to the firm of in writing by Scott, representing the gas Mullenhoff & Korber, to which firm the gas company, as follows: company, with the consent of the city, had transferred a portion of its claims against I, Ramon Negron Flores, secretary of the the city in Porto Rican money, to be paid city council of the city of San Juan, hereby in its equivalent in gold. By the result of certify, that at the meeting held by the city the debits against the gas company the items council of San Juan, on the eighteenth day credited to it were extinguished and the ac- of this month, the following resolution was count balanced. Thus, the substantial dif- passed: ference between the two accounts arose from 20.—The president of the city council dethe fact that one stated the debt to be pay. clared that Mr. Scott, the contractor of the able in gold or United States money, the public lighting for the city, and Mr. Korber, other treated it as payable in Porto Rican a member of the firm of Mullenhoff and Korcurrency

ber of this city, had called on his office and Subsequently, the city pleaded that it had stated that the amount of seven thousand paid to Mullenhoff & Korber the sum of two hundred and twenty-eight pesos and $5,196.80 in United States gold, and was en- eighty-seven cents, Porto Rican currency, titled to due credit therefor, and it was total amount of the credit due to Mr. Scott, thereafter agreed between counsel that this on account of his services as contractor from amount had been paid under the transfer in November of the year one thousand eight question. As will hereafter appear, $4,337.- hundred ninety-nine, to last May, being de32 of the sum was paid as the equivalent of ducted the amounts already collected by the $7,228.20 in Porto Rican currency, the said contractor, should be delivered to the amount due for street lighting up to June above said firm, to the credit of which Mr. 1, 1900, if estimated in Porto Rico, while Scott wishes this amount to be passed. the balance of $859.48 was paid as satisfy- The city council agreed with the declara. ing the charge made for street lighting in tions of the president, and passed the resoluthe month of June, 1900, also consisting of tion considering the said balance of seven a larger sum in Porto Rican money.

thousand two hundred and twenty-eight At the trial the undisputed proof showed pesos with eighty cents equivalent of four that in 1875 the city made a contract, to thousand three hundred and thirty-seven last for twenty-five years, with one Stein- dollars and thirty-two cents in favor of the acher for the lighting of the city, which con- firm Mullenhoff & Korber, being therefore tract, about 1878, was assigned to the gas the municipal corporation relieved from any company; that shortly after there was a dif- compromise with Mr. Scott concerning the ference between the parties as to whether said amount, without any prejudice to the the sums due under the contract were pay- resolutions to be passed some time in the able in Porto Rican money or in current for future, about the claims previously filed by eign money. As a result, all the payments the said contractor. up to and exclusive of the items embraced And to begin the respective proceedings, in the suit were received by the gas com- I write and sign this declaration in San pany, under protest, in Porto Rican cur- Juan of Puerto Rico this twenty-second day rency. So far as any payments made on ac- of June of the year one thousand nine huncount of the items embraced in the suit and dred. stated in both accounts, it was undisputedly


R. Negron. shown that they were made in United States

On twenty-second June, being present Mr. gold. There was proof tending to show that Scott and Mr. Korber, the latter acting as the city, in making them, insisted that the representative of the firm, of which he is a gold should extinguish its equivalent partner, I notified them the above resoluamount in Porto Rican currency, whilst the tion, and they affixed their signature as a company claimed that the payments should proof of their acquiescence to the same, deonly extinguish a sum equal to the face the account of the month of June of this

claring at the same time, that the amount of value of the United States gold. Concerning the transfer to the firm of year should be recognized as due to the same

firm, to which the said amount must be Mullenhoff & Korber, and the payment made paid. I certify it. by the city to that firm, it was indisputably


R. Negron. shown as follows: That the gas company, (Signed)

Mullenhoff & Korber. being in want of funds, had agreed to trans


L. A. Scott. fer to the firm a given portion of its claim, San Juan, June 19th, 1900. and applied to the city to recognize the as- Let it be done. The Mayor, Egozcue. signment, and to pay to the transferees the sum assigned, and that action was taken on There was testimony, admitted without this request by the city, and was accepted objection, tending to show that at the time the city accepted this transfer it was under the argument, that some reference was made stood that the reservation made in the wric- to such fines in the testimony of one or more ten agreement related only to fines which it of the witnesses, such reference in no sense was contended the city had unjustly imposed tended to establish that the fines had been on the company. The court rejected the legally imposed. As to the assignment of offer of the city to prove that the parties, error relating to the refusal of the court to by their conduct prior to the period covered allow testimony for the purpose of showing by the items sued for, had interpreted the that even if, under the contract, payment in contract as meaning that the payments were foreign current money was required, the to be made in Porto Rican money, and not contract was tacitly modified, we deem it otherwise. The court also refused to in- unnecessary to express an opinion, for the struct, at the request of the city, that the following reasons: The record shows that, contract was payable in Porto Rican money, subsequent to the ruling complained of, and charged that it provided for payment in without objection, testimony was admitted foreign money, exclusive of Spanish gold, establishing that, although all the payments which was current in the island at the time made up to the first of the items embraced the contract was made. The court further in the claim in suit, were made by the city instructed that the payments made by the to the gas company in Porto Rican money, city to Mullenhoff & Korber in gold should nevertheless that such payments were only be debited to the city at the face value of received by the gas company under protest, those payments, unless the jury found that asserting its right to be paid in foreign the minds of the parties had met on a new current money. However conclusive on the contract to substitute Porto Rican currency gas company may have been the receipt by for the foreign current money stipulated by it of payment in a different medium from the contract. The court, moreover, refused that which it asserted the contract required, the request of the city to charge that if, at the fact of the protest operated to prevent the time of the transfer to Mullenhoff & the inference that the medium actually reKorber, there was a compromise entered ceived was admitted to be the one in which into between the parties by which the pay- future payments should be made. ment to the firm of a given amount in Unit- With the questions just referred to out of ed States currency should extinguish a the way, it is apparent from the statement larger amount of the debt due the company which we have made of the case that the in Porto Rican money, that the parties were record requires us to decide only two quesbound thereby, as to such payment. Be- tions: First, in what money were the sums sides, the jury were instructed that, as there due under the contract payable? and, secwas no proof concerning the fines imposed by ond, the effect of the agreement concerning the city upon the company, as stated in the payment made by the city to Mullenhorf & account of the city, such items must be dis- Korber. regarded, and that interest, as calculated in 1st. In what currency were the sums due the account of the city, not being exigible under the contract payable? umder the local law, must also be disregard- The contract, of which only a translation ed.

is in the record, was passed before a notary, There was a verdict and judgment thereon and is voluminous, containing in minute deagainst the city for $8,761.35, and this writtail a recital of all the occurrences which of error was prosecuted.

took place from the date of the first steps

taken to make a contract, and its consumMr. N. B. K. Pettingill for plaintiff in ination. error.

Excluding irrelevant details, it appears as Messrs. Frederic D. McKenney, Fran- follows: cis H. Dexter, and John Spalding Flannery Some time in 1874 the city advertised for for defendant in error.

bids for a contract for lighting. Proposals

were received from a Mr. Steinacher and Mr. Mr. Justice White, after making the Olney. Steinacher, whilst proposing to bind foregoing statement, delivered the opinion of himself to light lamps for $3 monthly for the court:

each lamp, suggested that the city modify In order to come to the principal con- its request for proposals in several particutroversy covered by the assignments of error lars, one of which was that there should be we dispose of certain contentions which we included in the contract the purchase by the deem of minor importance. We think the contractor of gas works then owned by the court was right in instructing the jury that city. This suggestion was accepted, and it must disregard the items as to fines preparatory to making a call for bids, after charged by the city against the gas com- obtaining the authority of the provincial pany, because no proof was offered on the leputation of Porto Rico, the city directed subject. Whilst it is true, as asserted in that the gas works be appraised by certain

gas works

city officials. This appraisement was made administrative provisions, and Steinacher as follows:

yielded as to the price to be paid for the

gas works, it being recited in the proceedRecapitulation:

Pesetas. ings of the city on the subject that, in order Value of the buildings..

19,176.25 to terminate the difficulties, "Mr. Steinacher Fixed and loose materials in the

expresses himself disposed to the acquisition

48,908.85 of the said buildings, etc., as published in Fixed materials in the city. 10,624.00 the Official Gazette of the 8th of June last,

for the amount of $31,741.82 in currency, Total amount ..... .... 78,709.10 and to take under his charge the public The present appraisement amounting to light at $3 monthly for each lamp, at same 78,709.10 pesetas, or $31,741.82 of the cur- currency, according to the price published.” rency in commerce.

The houses tendered to secure the bond Porto Rico, 26th of May, 1875. were accepted by the city, and, in order to The municipal architect.

give the city a first mortgage, a liquidation (Signed) Domingo Sesmero. was had between Steinacher and the city

under the prior contract, and by this liquiThe city thereupon called for new prodation it was established that Steinacher posals. Among the many conditions exacted owed the city $203 in “foreign currency," were, first, that the bidder should agree to which he paid. To ascertain whether the light street lamps at $3 monthly for each value of the houses was equal to the requirelamp, and that payment for the same “will ments of the city, they were appraised by be made in the circulating foreign money in the city officials in Porto Rican money, and commerce for the value that it is received, this sum was reduced to foreign currency, without any premium that will equalize it and, as the amount in foreign currency to the Spanish official current money;" equaled the $9,000 required by the condithat he should buy the gas works, appraised, tions of the city, the houses were accepted as we have above stated, at $78,709.10, Porto and a new mortgage for that amount was Rico money, at its equivalent in foreign cur- given. Under these proposals and acceptrency,—$31,741.82; that the bidder should ance the contract was executed, conforming furnish a guarantee of $6,000 in cash or a in all respects to the proposals and bids as bond for $9,000, to be secured by first mort modified by the proceedings which we have gage on a house in the city, satisfactory to narrated. the municipality. Many details were pro- The contention that the $3 per month for vided in the conditions; as to the manner lighting street lamps was payable in Porto in which the contractor should perform his Rican money is based on the fact that duties; as to fines to be imposed by the city sometimes in the contract the sum to be for neglect in the quality and character of paid is referred to as in currency, without the light furnished, and for various other any qualification. The arguments would delinquencies, and it was also provided “the have cogency if the passages in the contract penalties for faults in the service and sup- relied upon stood alone; but its unsoundply of gas to the public will be imposed by ness becomes apparent by a consideration of the alcalde without appeal.”

the context of the contract. The estimate Steinacher was the only bidder in answer of the property to be sold in Porto Ricau to this call for proposals. He offered “to money and its liquidation in foreign cur. take charge of the city service for the rency; the terms of the bid; the proposition amount of $3 currency for each lamp,” and of Steinacher, which was accepted, to pay to buy the buildings and apparatus, etc., for for the gas works at the sum of the foreign the sum of $22,000 in currency, instead of current money to which the Porto Rican $31,741.82, as required by the requests for money was reduced, and to do the lighting bids made by the city. In his proposition, at $3 per lamp in the same currency; the moreover, Steinacher tendered two houses, action of the city concerning the liquidation stating the fact to be that one of them was of the prior account, and the mortgage upon encumbered by a prior mortgage in favor of the house, -all demonstrate that both the the municipality, which he, Steinacher, had proposals of the city, the acceptance by given to guarantee a prior contract existing Steinacher, and the contract fixed current between himself and the municipality. In foreign money, exclusive of Spanish gold, addition, his bid suggested various modifi- as the medium in which the service for cations in the administrative provisions lighting the street lamps was to be paid. enumerated by the city in its conditions. The court, therefore, was right in its inThe bid, not being in accord with the propo-struction as to the medium of payment resition submitted by the city, was rejected. quired by the contract. We find, however, Negotiations then ensued, the result of nothing in the contract to support the conwhich was that the city yielded as to the 'struction that it required the payment to

p. 749.

be made in foreign current money circulat- | payment in that money extinguished simply ing in the island at the time the contract the amount paid in foreign money, unless was made, instead of money of that char- it was found that the minds of the parties acter circulating at the time the payments had met on an agreement engendering an were to be made. The general rule, under entirely new contract, substituting Porto both the common and the civil law, is that, Rican money for foreign currency. in the absence of a stipulation to the con- It is urged by the city that error to its trary, the character of money which is cur- prejudice resulted from refusing to give the rent at the time fixed for performance of requested instruction. To sustain this propa contract is the medium in which pay-osition the doctrine is invoked that where ments may be made. Butler v. Horwitz, 7 one receives in payment a different thing Wall. 258, 19 L. ed. 149; Willard v. Tayloe, or medium from that called for in the con8 Wall. 557, 19 L. ed. 501; Trebilcock v. tract, such receipt is binding. Undoubtedly Wilson, 12 Wall. 687, 20 L. ed. 460; Com- the general rule obtains, and is based on mercial Code of Porto Rico, art. 312; Span- the premise that the discharge of a contract ish Civil Code of Porto Rico, arts. 1091, in a different thing from that for which the 1157, 1170; Code Napoleon, art. 1246; Au- contract provides, necessarily is an accord brey & Rau, vol. 4, p. 158; Mourlon, vol. 2, and satisfaction as to the particular pay

ment concerning which the different thing There was, therefore, error in instructing is received. Sheehy v. Mandeville, 6 Cranch, that the time of making the contract was 263, 3 L. ed. 218; Very v. Levy, 13 How. to be alone considered in determining the 357, 14 L. ed. 179; Bull v. Bull, 43 Conn. foreign current money for which the con- 455; Neal v. Handley, 116 Ill. 418, 56 Am. tract provided. We think, however, such Rep. 784, 6 N. E. 45; Dimmick v. Sexton, error was in no sense prejudicial. This 125 Pa. 334, 17 Atl. 345. follows, because it was conceded that, if True also is it that it has been settled foreign current money was required by the by this court (Savage v. United States, 92 contract, money of the United States cur- U. S. 382, 23 L. ed. 660) that this doctrine rent at the time the contract was made was is applicable to the receipt under protest, within the contemplation of the parties, and in discharge of a particular payment, of a that such money was also current in the different money medium from that which island at the time when performance was was required by the contract. Whilst we due. From this it results that the rights have not been referred to any Spanish auof the parties were in no way affected by thority showing that these principles obthe erroneous ruling.

tained under the law in force in Porto 2d. The effect of the agreement concerning Rico, as the doctrine rests upon principles the payment made by the city to Mullenhoff known to the Roman law (L. 17, C. De de Korber.

Solut.) enforced under the Code Napoleon On the face of the written agreement be- (Journal de Palais Répertoire, v. 10, verbo tween the city and the gas company it un paiement, p. 10, No. 117; Toulier, t. 12, p. doubtedly appears that a stated sum of 355; Duranton, t. 12, Nos. 79 and 80), we money, to be paid in United States currency, cannot hesitate to conclude that the doctrine was to extinguish a larger sum in Porto in question prevailed also in the Spanish Rican money.

civil law in force in Porto Rico. Whether As we have seen, there was testimony it is applicable to the facts of this case is, tending to show, and none tending other then, the question. wise, that the reservation in the written Now, whilst it may be at once conceded document concerning "claims previously filed that the doctrine in question is applicable by the said contractor,” and which were to to the payments made in Porto Rican be "passed some time in the future," solely money before the date of the first item sued related to claims for fines which the city had for, it is equally clear that it cannot be assessed against the gas company, and the applied to the payments thereafter made, justice of which the company disputed. The including those to Mullenhoff & Korber, city asked the court to instruct that if it since they were made in United States curwas found that at the time of the agree-rency. The contention that these payments ment it was stipulated by way of com- in such money extinguished a larger sum promise that the larger sum owing at the than the par value of the money paid retime should be extinguished by the pay- duces itself to this: that a larger sum was ment of the lesser amount, the parties were satisfied by the payment of a lesser sum, bound. This request was refused and ex. because there was an agreement to that cepted to. The court, in its general charge, effect. The gas company in effect insists in the fullest manner instructed the jury that this cannot be sustained, because of that, as the medium of payment required the well-established rule "that where a by the contract was foreign current money, 'liquidated sum is due, the payment of a

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