This litigation grows out of two contracts, both dated February 16, 1951. Liability rests upon compliance or
One of the contracts was executed between World Wide Manufacturing, Inc., a New York corporation with its principal office at Eidgefield, New Jersey, which hereinafter we will call World Wide, and W. H. Eussum and B. M. Hennington, a partnership, doing business under the name of Dixie Shook & Box Company located at Crystal Springs, Mississippi, whom we will hereinafter call complainants, and Frank Mariani, a resident of New York City, New York, who, when the contracts were executed, was president and owner of a majority of the stock of World Wide. Hereinafter we will refer to Mr. Mariani by use of his surname.
A short reference to the background of the contracts may be of aid in understanding and solving the problems involved in this litigation.
On and prior to January 17, 1951, Eisen Metal Products Company of Lodi, New Jersey, was a party to a prime contract with the United States, under which Ei-sen was to manufacture for the Federal G-overnment a quantity of wooden containers, or boxes, suitable for transportation of ammunition. Eisen entered into a subcontract with World Wide under which World Wide was to prepare and furnish the materials for these boxes, and, as to certain types, assemble the furnished parts into the completed boxes. On January 17, 1951, Eisen sent to World Wide a purchase order for some 48,000 wooden packing boxes, agreeing to pay a stipulated price per unit therefor. This order stated the work was to be done according to Government print and specifications and shipments were to be made as per schedule set out in the order, beginning with February and ending in December, 1951. The order required “3 copies of certification that materials are in accordance with specifications”. The order specified that the contract with
On March 27, 1951, Eisen mailed to World Wide another purchase order for 190,000 “wood spacers in accordance with our print No. 10-113 enclosed”. These spacers were to be packed in cartons, and there were to be four spacers to each box and provided for “Government inspection at source”. The order also specified “The above prices are for the life of this contract”. It then recited the contract with World Wide was a subcontract, giving the Government number of the contract, and made it subject to the same six regulations and governmental requirements as to discrimination, eight hours work a day, and right of termination or modification by the Government, etc.
We now deal with the terms of the two contracts of February 16,1951, which are of prime importance in this litigation.
The first contract was between complainants, World Wide and Mariani. It recited that Mariani was the holder of the majority of the stock in World Wide, and that World Wide was engaged in the manufacture of wooden boxes and containers; that complainants had the facilities for the manufacture of such boxes and containers and what is called in the contract “shook”, and that complainants, by separate agreement with Mariani,
In paragraph 5 of the contract World Wide agreed to send, at its own expense, Mr. Herbert Kott to Crystal Springs to install the machinery and equipment leased, as hereinafter shown, by Mariani to complainants. Mari-ani was granted an option, within one year, to purchase a one-fourth interest in the partnership of Rus sum and Hennington at Crystal Springs, on the basis of actual cash value of such interest. It was also agreed that if Mariani decided to sell the machinery and equipment before its installation at Crystal Springs complainants would be given the first right to purchase. Paragraph 8 required all of the work by complainants to “he done in a first-class workman-like manner”, and it hound complainants to comply with all Federal, State and Municipal laws, rules and regulations ‘ ‘ pertaining to the manufacture and sale of the commodity either commercially or for defense orders ’ ’, and particular attention was called to notation of the eight laws and regulations set out in the Eisen-World Wide contract above mentioned. It was recited that while, for the near future, the parties contemplated fulfillment of defense orders for'the Government, the hope was expressed that a long range plan might grow out of this relation of the parties which would enable them to serve the beverage trade of the
There was attached to, and made a part of this contract, a purchase order for 48,000 “Wooden Packing Box for Modification Kit M-34”, to be completely assembled and set up, according to Government drawings and specifications, and requiring three copies of certification that the materials are in accordance with specifications, and containing the notation “government inspection at the source.” It then set out the amounts and dates of deliveries, ranging from February to December, but in February only samples should be furnished. The purchase order then stipulated that it was a subcontract under the Eisen contract, giving the number of the Eisen-World Wide contract. The purchase order stipuated that the six rules and regulations and laws, a part of the Eisen contract, were also a part of this purchase order, and consequently a part of the first contract of February 16, 1951.
The other contract under date February 16, 1951, was between complainants, a partnership, doing business at Crystal Springs, Miss., and Mariani. It recited that Mariani owned and controlled certain machinery and equipment located at Glendale, New York, which had been inspected by complainants, and which they, complainants, intended to transport to Crystal Springs and there install on certain premises. The parties then agreed that Mariani, at his own expense, would dismantle
The bill herein, filed by Russum and Hennington as complainants, June 2, 1953, charged that World Wide and Mariani breached the first February 16th contract in three respects: They failed to furnish an inspector of the finished product at Crystal Springs, the point of production; they failed to furnish a guarantee of immediate payment at Crystal Springs of the loaded materials; and they finally refused to permit complainants to finish the contract.
Additional expense incident to the manufacture by complainants of shoolcs for 8640 boxes in the sum of $2,160.00, “in excess of what the cost for manufacturing said boxes would have been if said contract had been complied with”.
The price and value of shook, spacers and assembled boxes, shipped October 31, 1951, invoice No. 13, for which "World Wide refused to pay, $733.94.
Extra work, performed on the ordered materials, invoice 14, in the sum of $734.40
The value of additional lumber to tongue and groove and glue corrugated boxes, all of which was extra work on 8640 boxes, invoice 15, in the sum of $2,073.60.
Profits which would have been made on 39,360 boxes “if said contract had been performed”, in the amount of $8,364.00.
Profits which would have been realized by complainants on the manufacture of 142,833 spacers, which World Wide would not permit them to manufacture. The total damage claimed by complainants was $15,494.27.
The bill further sought to attach the machinery and equipment of Mariani, delivered to complainants under the lease agreement above set forth and by complainants installed at Crystal Springs, and as general ground for the attachment asserted that Mariani was a nonresident of Mississippi and that said machinery and equipment were in the possession of Dixie Shook & Box Company, a corporation, which had been chartered under the laws of Mississippi in 1952, and to which complainants had conveyed all of the personal property leased by Mariani to complainants. It was asserted that Mariani was liable under the first February 16th contract for the defaults of World Wide, and that the leased property should be subjected to the payment of such guaranteed obligations as might be determined by the equity court herein.
Complainants, in their answer to the cross bills, denied they had broken the contracts in the manner alleged, but, in effect, admitted they had used to some extent the leased machinery and equipment in the manufacture of materials for parties other than in fulfillment of the contracts with World Wide. They denied they had converted the leased property.
Much testimony was taken and an extensive hearing was had upon the trial of the cause.
On the question of the breach of contract by World Wide the chancellor found that it breached its contract in (1) not furnishing a government inspector to examine the finished products at Crpstal Springs; (2) in not making sight draft guaranty arrangements with a local bank, as provided in the contract; (3) that World Wide wrongfully terminated the order given complainants to manufacture 48,000 boxes; that complainants did manufacture and deliver 8,640 of said boxes; that complainants lost in profits as a result of such breach of contract
The chancellor appointed a commissioner to make sale of said machinery and equipment. It appears that subsequent to the final decree in the lower court the machinery and equipment were badly damaged in a fire.
Prom the final decree, as above shown, World Wide and Mariani appealed to this Court without supersedeas.
Can complainants recover damages because of the failure of World Wide to have present at Crystal Springs a government representative to inspect the boxes as loaded under the purchase order for 48,500 boxes? We do not think so. In the first place this provision in the contract was mainly for the benefit of the government. The contract here was subject to a prime government contract. It was part of a national defense contract.
In addition to the foregoing we think complainants, by their subsequent conduct, waived the appointment of an inspector. The parties acted under this contract from February 16th to the latter part of October, or the first of November, 1951. Complainants, made some nine shipments at various times pursuant to the arrangement between the parties. On May 30th complainants telegraphed World Wide they had shookready to ship and to send an inspector or waive inspection. The next day World Wide wired that inspection was waived on that carload. On June 8 complainants wired World Wide “Arrange inspection or waiver of two cars next week”. On June 12 complainants wired World Wide “Wire immediately waiving inspection car PER 81187 loaded * * ”. Same day World Wide wired complainants requesting information as to contents of that car and also the contents of the next car to be shipped. The requested information was furnished and the telegram also contained this statement “Inspection waived by you on both cars unless otherwise advised early tomorrow”. The cars were shipped without inspection. On June 15 complainants wrote World Wide that if World Wide could not arrange for the government inspector, then that World Wide’s bank should telegraph complainants’ bank at Crystal Springs waiving inspection. We do not find in the record a reply to that telegram. On June 26 complainants wrote World Wide they had failed to load the two cars but had loaded another car, and on the same
In 17 C. J. S., pg. 992, Sec. 491, it is said “A party to a contract may waive provisions for his benefit ; and likewise there may be a waiver of conditions or severable stipulations”. See also Moore v. Y.
&
M. V. R. Co., et al,
It will be noted that World Wide, in paragraph 4 of ■the contract, obligated itself to arrange with the local bank of complainants to pay sight drafts drawn by com
The subsequent course of conduct and dealings between the parties waived the provision. This provision was coupled with the appointment of an inspector. There was no obligation to effect a guarantee unless inspector’s certificate, showing the quantity of the manufactured materials and that the workmanship was of the quality called for in the contract, accompanied the draft. As above stated no inspector was appointed. Complainants, knowing a Government inspector had not been appointed, did not suggest that a mutually agreeable inspector be engaged. World Wide, of course, could not afford to pay for the materials without an inspector’s certificate.
On May 11, 1951, World Wide sent to complainants a check for $2,500.00 “on account”. This was accepted by complainants. This was an advance payment. On June 12 complainants wired World Wide they had a car ready and asked that inspection be waived and “Also wire money or bank Guarantee to Trucker’s Exchange Bank for both cars”. World Wide, by telegram, asked for the contents of the car. Complainants wired back the information, giving the amount owing complainants as $3,460.00 The next day World Wide, by air mail, sent check to complainants for $6,920.00. On June 6 complainants, by telegram, requestd World Wide to send check for $2,978.92 and for $2,329.00 for two cars complainants were ready to load. On June 12 complainants, by telegram, reminded World Wide check had not been received. On June 12 World Wide telegraphed complainants certified check had been air mailed to them the night before. On July 20 complainants requested that
It is contended World Wide wrongfully terminated the arrangement and is liable for profits complainants would have realized had they been permitted to manufacture the remainder of the 48,000 boxes. They did manufacture 8640 boxes and the chancellor found that the profits would have been $10,080.00 had they manufactured the remainder of the ordered boxes. We do not think the proof shows World Wide terminated the arrangement. Apparently that was done by complainants —at least, complainants were agreeable to such termination. The Eisen order for purchase of said boxes contained this provision ‘ ‘ The above prices are firm for the life of this contract, subject, however, to a maximum increase of 10% to cover additional cost of seller’s labor
However, the chancellor found, at least by inference, that complainants were ready, able and willing to fulfill the purchase order for spacers. The order called for manufacture by complainants of 190,000 spacers. Complainants did manufacture and deliver 47,167, leaving 142,833 yet to be manufactured and delivered. The chancellor found that had complainants manufactured and delivered the remainder of that purchase order, to-wit 142,888, as they could and would have done, there would have been a profit to them of $1,428.33. The chancellor was justified in so finding. However, since we have held that complainants failed to carry out the contract to manufacture and deliver 48,000 shook, covered by a purchase order under the contract of February 16th, the question arises whether the order for the spacers is severable from the purchase order for the shook.
17 C. J. S., Contracts, Sec. 332, p. 788, says: “Primarily the question of whether a contract is entire or severable is one of intention, to be determined from the language which the parties have used and the subject matter of the agreement. A contract may both in its nature and in its terms be severable and yet rendered entire by the intention of the parties, or, by agreement, express or implied, the parties may render
We think that the parties here have made the contract divisible as to each purchase order and that each purchase order stands alone, for instance: The contract between World Wide, Mariani and Russum & Hen-nington, dated February 16, 1951, provides in Sec. 2 as follows: ‘ ‘ The price of shook to the first party shall at no time be higher than that quoted by the second party to other bona fide purchasers. Each order shall be negotiable as to price before acceptance.”
Thus as between the parties no purchase order was to be accepted and become binding until the price with respect to that particular order was agreed upon. Of course, as to the purchase order for 48,000 shooks, the price was fixed in the contract at $2.12% per box, f. o. b. Crystal Springs.
In Sec. 4 of the contract as heretofore set out, provides: “If for any reason no government inspection is required or made at the plant of the second party, then the inspection certificate shall be that of an inspector designated by mutual consent of the parties, and the inspection report shall certify that the materials inspected comply with the specifications outlined in the particular contract under which the shipment is being made, and also certifying to the quantities involved in such shipment. ’ ’
Sec. 12 of the contract reads as follows: “Each party may terminate this contract upon 60 days written notice given by registered mail to the other, whereupon this agreement shall come to an end, except that all unfinished contracts or orders of World Wide previously accepted shall be completed as contracted and all payments thereunder shall be made. ’ ’
We think the two purchase orders were severable and the chancellor was justified in finding complainants lost a profit of $1,428.33 on the spacers.
The chancellor found that Mariani was entitled to a credit of $425.00, rent on the leased machinery, as a result of its use in manufacturing products for other parties. He also found that the attachment against the leased machinery and equipment was rightlfully sued out and that the machinery and equipment were liable to be subjected under such attachment to the personal decree rendered against World Wide and Mariani. We do not find that he committed error in so holding.
This means that complainants are entitled to a personal decree against World Wide and Mariani for the sums of $1,428.33, spacer profits, and $3,067.20, compensation for extra work and labor upon the 8640 articles delivered under the 48,000 purchase order, less $425.00 credit to Mariani for machinery rental, or a net personal decree of $4,070.53, with legal interest thereon from September 2, 1955, the date of the final decree in the lower court in this cause, and that the attached machinery and equipment or the proceeds thereof, if already sold, may be subjected to the payment of such personal decree. The costs of this appeal will be assessed two-thirds
Affirmed in part and reversed in part and final judgment here.
ON SUGGESTION OF ERROR
Appellants, in their suggestion of error, among other things, contend that ‘ ‘ The court erred in failing to hold that World Wide recover from appellees the sum of $530.00 freight paid by World Wide on the shipment of additional shook and spacers, which were delivered on or about October 31, 1951 to make up shortages which then existed from prior shipments.”
The shortages in question arose on account of an insufficient number of such articles an also defects in some of them.
Under the contract, delivery of the manufactured articles was to he made at Crystal Springs, where it was contemplated that an inspection would occur. In view of the course of dealing between the parties, that is, the appellees’ failure to insist on such inspection at that point, the original opinion held that the appellees were not in position to maintain that the appellants' had breached their contract in failing to inspect at the place of delivery, namely, Crystal Springs. However this does not mean that the appellees agreed that the inspection should be made at the ultimate destination of the merchandise. In practice, the appellants had not made inspections conditions precedent to payment.
There is a twofold answer to this proposition. If the appellees failed to ship enough shook and spacers obviously the appellants did not pay the freight on such shortage in quantity as was not shipped. Consequently there was no double payment of freight in that instance.
Suggestion of error overruled.