| U.S. Circuit Court for the District of Western Tennessee | Jan 17, 1896
(after stating the facts as above). The investigation before the master to ascertain the “cost” of the boilers, as shown by his report and the exceptions to it, convinces me that the right of the parties must be governed solely by the written contract. That was my impression at the hearing, but because Holmes admitted that he was to furnish the boilers at cost, without profit, and the defense was that, by fraud, he had procured a written contract for more, it seemed desirable, before final determination, to definitely ascertain precisely what the cost had been, which the proof did not then disclose. It seems, from the master’s report, that it is quite impossible to fix this satisfactorily; and this in the very nature of the things unless we give a meaning to the word “cost” that is more restricted than the plaintiff is willing to concede was meant in the negotiations for the sale. We are all familiar with the seemingly insuperable difficulty of ascertaining the cost, for example, of producing a pound of cotton or of making a yard of cloth; and perhaps no two persons engaged on the problem would agree on the prime elements of the calculation, as none of the parties, witnesses, or the master can agree on them in this case. Even in the simpler application to mere bargain and sale of a thing already in existence, and not to be manufactured, the term is ambiguous, and so much so that it is not impossible that often it will be found to avoid the contract for incurable uncertainty, though I have not found it necessary to go into that subject. Specific performance of such a contract was refused, because it would be to make a contract for the parties and then execute it, where it had been agreed that arbitrators should fix the cost, and they had failed by disagreement about it; and in another case where it was so agreed, and one of the parties died, a court of equity would not specifically perform it, because of the incompleteness and uncertainty, such a case not being analogous to a recovery of the price of goods upon a quantum valebat. Frye, Spec. Perf. 165. In searching for the legislative meaning of the word “cost” in a customs act, Mr. Justice Washington said, “The term is certainly of an equivocal meaning”; and in argument illustrates by saying:
“The actual cost of a bale of goods purchased at Liverpool is composed of tbe price paid for it, or, in other words, the prime cost and charges, including commissions on the purchase, the packages, if any; and, if the goods were purchased at the manufactory, then it includes, not only the prime cost and all charges attending them to the place of exportation, but also the charges before mentioned, and perhaps many others.” Goodwin v. U. S., 2 Wash. C. C. 493" court="None" date_filed="1811-01-15" href="https://app.midpage.ai/document/goodwin-v-united-states-9298705?utm_source=webapp" opinion_id="9298705">2 Wash. C. C. 493, Fed. Gas. No. 5,554.
It would be interesting to search the cases which have, under varying circumstances, defined the term; but none has been produced, and I have found none, which limits the meaning as the defendant does, nor expands it as the plaintiff does. Indeed, they ,seem quite short of any direct bearing on the word as used by these parties, respectively. It would be comparatively easy to measure or weigh the materials used in these boilers, count the price or value of it, keep account of the hours of labor, and its value or price, and find these two primary factors of the problem, and also quite easy to avoid all the rest by counting these and ordinary freight and charges as the only cost; but that is hardly fair to the plaintiff, and so far from merely cutting away its “profit,” which was agreed to be surrendered, would probably entail a loss. Yet the master concedes the cost, ascertained as he does it, is not wholly fair to the defendant; and one might easily suggest other elements of calculation largely increasing the cost, which, for a problem in economics, might be counted. Hence it was eminently desirable that these parties should beforehand do just what the plaintiff contends they did, — settle exactly what this “cost” was to be. If the defendant company, eminent as it is known to be for its high- business character and enterprise, did not revise Holmes’ offer before signing it, and see that the sum demanded was not too large, I cannot see that it can call on a court of equity to make such a revision now, after they have had the boilers in use, and the only possible question is what shall be paid for them. It would take the strongest proof of fraud or mistake to induce a court to set aside a written contract signed by the parties, distinguished business men as they were, upon the charge of imposition and overreaching such as is made in this case. And there is no such proof here; Billings and Holmes, upon whose testimony, respectively, the case depends, quite evenly balancing each other in the scales with which we judicially weigh the evidence. Even on the theory of the defendant, that it has only to pay the “cost” of the boilers, Holmes’ testimony that, before he prepared the contract for signature, he and Griffin calculated the cost to the plaintiff company at $17,200, finds corroboration in the finding of the master in one calculation he makes of the cost at $16,792.74. It is urged against this that Holmes and Griffin now calculate the cost to be something over $20,000, and demand that sum, if the case is to be settled on the basis of the cost, and not the contract. But this is only a thing of calculation, and in such an inquiry it is open to them, if we break away from the writing, to make the final sum as large as possible on any theory of cost they may adopt, or find a sensible pretext for suggesting to us. They testify that in one of their calculations they came to a few hundred dollars over $17,000, and, because a rival manufacturer offered the defendant a bid for $17,000, they put that offer in the written contract, which explains the restraint they felt in figuring
Holmes, perhaps, is justly subject to some criticism as a witness; but, after all, taking into consideration tbe adverse criticism of Billings’ evidence, I think it is not proved that Holmes committed any fraud on tbe defendant company, in procuring its signature to this contract. Tbe basic fact for tbe charge is that Holmes wrote into tbe contract a sum very much larger than tbe cost of tbe boilers, and this is not proved at all, unless we strip tbe calculation to its least possible factors, and adopt a theory of lowest possible cost, — tbe bare price of material and labor, almost But this is only a construction put by tbe defendant company on tbe word “cost,” and there is no proof of a specific agreement that Holmes should work tbe. cost down to a minimum like that, in Billings’ interest. Billings, for reasons given in tbe proof, arising out of tbeir anterior business and personal relations, seems to think Holmes an ingrate, if be did not do this, and possibly, for similar reasons, believed that Holmes would do it, and also that be should have come to bim, and gone over tbe figures with bim, before writing up tbe contract; but, Holmes not having unequivocally agreed to do so, it was not a fraud on Billings to disappoint bis expectations, wbicb are no doubt much more vivid now, after tbe fact, than pending tbe negotiations, during wbicb be was really neglectful about having some more precise, understanding than bis own unexpressed conception of tbe meaning of tbe word “cost.” In this state of tbe proof, I conclude to reject tbe testimony, for all purposes, except as it tends to prove tbe fraud alleged; and, being inconclusive as to that, it is useless as against tbe contract. Tbe exceptions to tbe master’s report will be overruled, and it will be confirmed, with tbe allowance claimed by him for making it. The plaintiff to have a decree on tbe basis of tbe sum stipulated in tbe written contract, with interest, subject to such credits as tbe defendant may> be entitled to, if any, with a reference to tbe master to fix this amount, if tbe parties disagree about it. Defendant to pay the costs.