Mark v. Stuart-Howland Co.

226 Mass. 35 | Mass. | 1917

Rugg, C. J.

The action of Mark and others, who hereafter will be called the plaintiffs, was brought first. The declaration is in two counts, the first to recover damages for breach of a written contract dated May 25, 1908, and the second upon an account for goods sold and delivered to the Stuart-Howland Company, who will hereafter be called the defendant. The defendant answered, pleading first, a general denial, and second, in recoupment, that, although the defendant had complied with the terms of the contract of May 25, yet the plaintiffs on December 12, 1908, had violated the terms of that contract by refusing to fill an order given by it to the plaintiffs, and thereafter had refused to carry out the contract and had repudiated it to the great loss of the defendant. The second is a cross action brought by the defendant against the plaintiffs. The declaration in this action contains one count for damages arising from the general breach of the contract of May 25, 1908, one for loss of profits from December 12, 1908, to the end of the contract term, and a third for damages for delays in shipments of its orders given to the plaintiffs under the contract. The cases were tried together.

The contract provided in substance for the appointment of the defendant as the exclusive agent for the New England States for the plaintiffs’ entire line of rigid iron conduit for á period of two years, with a privilege of written cancellation by either party on sixty days’ notice, and an absolute privilege of cancellation on the part of the defendant by giving written notice. The plaintiffs quoted “a discount of 50, 4/10s & 5” from its regular published list, the price, however, to be raised or lowered according to market conditions, but the defendant always to be allowed a five per cent preference below the price quoted by the “Associated Manufacturers.” The controversy centres about an order given by the defendant to the plaintiffs on December 12, 1908, for twenty-five carloads of conduit, to be shipped to Boston unless otherwise directed, “Prices not to be higher than last shipment.” There was evidence tending to show that the order was not intended for immediate delivery nor delivery before January 1, 1909. On October 27,1908, the plaintiffs had written the defendant withdrawing all outstanding prices on conduit and submitting a schedule of higher prices for goods to be shipped after December 31, 1908. The chief issue between the parties was whether upon all the evidence the plaintiffs were bound to accept the defendant’s order of December 12 at the lower price, or whether they were justified in refusing to accept it unless at the higher price. There was much correspondence over this order and there were efforts at compromise of the differences. These were without avail and in May, 1909, the plaintiffs brought their action.

The plaintiffs asserted at the outset, and continued constant in the position, that they were not obliged to accept the order except at the higher price. The defendant, on the other hand, persistently maintained its position that the plaintiffs were obliged to accept the order at the lower price. There is nothing in the auditor’s report, in the reported testimony, in the correspondence as printed in either brief, nor in the conduct of the parties, to indicate that either ever receded from the initial position taken. On the contrary, although there were offers of concession, the evidence seems plain that each continued to assert thé soundness of the original contention put forward.

Under these circumstances the jury were instructed, subject to the defendant’s exception, that if, while the parties were considering their disagreement as to the meaning and interpretation of the contract and the rights and obligations arising from it, “they both got sick of the bargain and there was a mutual abandonment of the contract, then neither is from that time further bound by it ... . then one cannot be said to have violated the contract more than the other.”

As an abstract proposition of law this is correct. There are two objections to giving it as an instruction. The first is that abandonment of the contract had not been pleaded by either party. A general denial puts in issue only those facts which the plaintiff must aver and prove in order to establish a prima facie case. Friedenwald Co. v. Warren, 195 Mass. 432, 434. Amsinck v. American Ins. Co. 129 Mass. 185, 188. Abandonment of a contract as a defence is by way of confession and avoidance and not a direct denial of any element essential to the proof of the plaintiffs’ main case. Where the defence rests on a rescission or mutual, abandonment of a contract, the issue is whether the contract has ceased to have legal existence or has been terminated by reason of events occurring subsequent to the inception of the contract. It is a distinct and substantive ground of defence which “must be alleged in the an'swer according to the provisions of the practice act, if a defendant seeks to avail himself of it in order to defeat a recovery on a contract.” Fogg v. Griffin, 2 Allen, 1, 8. See Parker v. Lowell, 11 Gray, 353, 358; Pike v. Witt, 104 Mass. 595, 598; Wheaton v. Nelson, 11 Gray, 15; Grinnell v. Spink, 128 Mass. 25; Hight v. Bacon, 126 Mass. 10.

It is reversible error for the judge in his charge, for the first time so far as appears, to suggest a ground of exoneration for breach of contract, which was not open under the pleadings, as to which the course of the trial does not seem at all to have been directed, and to permit the jury to surmise, in the absence of evidence, whether this might not be a good way to dispose of the case. Plummer v. Boston Elevated Railway, 198 Mass. 499, 516.

The second objection to the instruction is that there was no evidence to which it was applicable. The plaintiffs have argued that the defendant must have known that it had no right to demand under the contract the acceptance and fulfilment of its order of December 12, and expected that the plaintiffs would refuse it, and that, by -insisting upon the filling of that order, it abandoned the contract. There is nothing to indicate that the trial proceeded upon this basis or that the defendant did not give its order of December 12 in good faith. A contract may be abandoned by conduct as well as by words. There is no basis for contending that an abandonment has arisen when both parties continue in good faith to assert contrary rights arising from a diversity of opinion as to the construction of the contract. It cannot be said to have been harmless error to permit the jury to speculate as to an abandonment when there was no evidence to warrant a finding that the contract had been abandoned. Kerr v. Shurtleff, 218 Mass. 167, 171.

It is necessary to consider questions which may arise on a new trial. Where a defendant pleads in recoupment and also brings a cross action for the same matters, it is the correct practice for the judge to require him to elect at the close of the evidence whether he will proceed on the answer in recoupment or on the cross action, Cox v. Wiley, 183 Mass. 410, 413, Hebert v. Dewey, 191 Mass. 403, 407, although the earlier practice seems to have been to permit him to rely on both. Cook v. Castner, 9 Cush. 266. Star Glass Co. v. Morey, 108 Mass. 570. Against the exception of the defendant the court hardly would have the right to direct that he should proceed upon the cross action rather than upon the answer in recoupment.

There was no error in the denial of the defendant’s requests 10 and 32, to the effect that, if the refusal by the plaintiffs to accept the defendant’s order of December 12, 1908, was a breach of the contract between the parties, then the plaintiffs could not recover for the goods sold and delivered. It is a general rule that, where one breaks a contract to be performed for an entire price, he cannot recover on the contract, because he has not performed it, nor on a quantum, meruit, because his voluntary failure to complete his agreement prevents recovery, save in restricted instances where there has been an honest intention to go by the contract. Homer v. Shaw, 177 Mass. 1; S. C. 212 Mass. 113. A wilful default in the performance of a stipulation not going to the essence of the whole contract, bars recovery. Sipley v. Stickney, 190 Mass. 43. Douglas v. Lowell, 194 Mass. 268, 273. Bowen v. Kimbett, 203 Mass. 364, 371. Hennessey v. Preston, 219 Mass. 61. But this principle is not applicable to the facts here disclosed. The instant contract has a double aspect; one was exclusive agency by the defendant for two years for one kind of goods manufactured by the plaintiffs; the other was sales of goods from time to time by the plaintiffs to the defendant at prices to be fixed by agreement of the parties, but in any event with at least a five per cent preference over other manufacturers. So far as the successive sales are concerned, they are severable and each is a contract of sale by itself. Young & Conant Manuf. Co. v. Wakefield, 121 Mass. 91. West End Manuf. Co. v. Warren Co. 198 Mass. 320, 326. Badger v. Titcomb, 15 Pick. 409. Raphael v. Reinstein, 154 Mass. 178. Bowker v. Hoyt, 18 Pick. 555. Barlow Manuf. Co. v. Stone, 200 Mass. 158. Knight v. New England Worsted Co. 2 Cush. 271, 290. John Hetherington & Sons, Ltd. v. William Firth Co. 212 Mass. 257. Breach of the agency aspect of the contract arising from failure to honor orders for goods sent by the defendant to the plaintiffs in accordance with the contract would not alone prevent recovery by the plaintiffs for goods already sold and delivered.

The defendant’s twenty-fifth request for an instruction, to the effect that the plaintiffs had not sustained the burden of showing that before December 15, 1908, they had performed their part of the contract, was refused rightly. Whether they had performed their part of the contract depended upon the further question whether they were bound to accept the defendant’s order of December 12. The decision of that question required the determination of the fact whether, rightly interpreted in the light of all the circumstances, that order was given in compliance with the prices and other terms which the plaintiffs justly demanded. It might have been found that the order was not at the prices quoted, was unreasonable in quantity, and in other respects was not upon terms which the plaintiffs were required to accept. These were questions for the jury.

There was no error in the instruction that the plaintiffs were not required to accept the defendant’s order of December 12, 1908, if it was thereby “attempting to make the price at that time for the whole of the following year,” nor unless the goods ordered were for immediate use and sale. Under the contract the price was to be raised or lowered with market conditions. On October 27, the plaintiffs notified the defendant in substance that outstanding prices were cancelled except that orders to be “ shipped prior to December 31st” would be accepted at former price, but that an advance price would prevail “For material to be shipped beyond December 31st.” There is nothing in the letters of December 2 or in the subsequent correspondence which modified or enlarged the plaintiffs’ obligation beyond the limits fixed on October 27.

The evidence of the expert, to the effect that the defendant’s order of December 12 was reasonable, rightly was excluded. So far as that question did not depend upon correct rules of law, it was purely for the determination of the jury, as to which expert testimony could afford no real help. Whalen v. Rosnosky, 195 Mass. 545, 547.

The plaintiffs’ exceptions raise a question as to the interpretation of these clauses of the contract: “The party of the first part quotes the party of the second part a discount of 50, 4/10s & 5 from its regular published list . . . with the understanding that price shall be raised or lowered according to market conditions but that the party of the first part will at all times during the life of this contract allow the party of the second part a 5% better price than that quoted by the so called ‘Associated Manufacturers.’ . . . The party of the second part agrees ... to pay all bills on or before the 10th of the month succeeding date of shipment less 5% and should any payments be delayed beyond that date, to pay interest thereon at the rate of 6%.per annum.” These two clauses of the contract seem to us to mean that the prices shown on all the bills to be rendered by the plaintiffs to the defendant should at all times be at least five per cent lower than the prices quoted by the “Associated Manufacturers,” and that, in addition to the discount thus given on the face of the bills, there should be a further five per cent deducted for cash payments made on or before the tenth of the month succeeding the date of shipment, but that this last deduction was to be allowed only in case payments in cash were so made. According to the terms of the contract the defendant would not be entitled to this final discount in the event of a failure to make a cash payment. But the contract is not expressed with clearness. If the parties had intended that the contract should mean what we interpret it to mean, it would have been simple to have added at the end of the last clause quoted, the words “on the face of the bill” or some similar phrase, or otherwise have expressed their intent by unequivocal words. The contract as written is one about the significance of which intelligent men might disagree. These parties did disagree on that point. The defendant did not pay for the June shipments on July 10 and there was correspondence touching the meaning of this clause in the contract. The defendant contended that it was entitled to this additional

five per cent discount even though it did not pay the bill on the tenth of the succeeding month, while the plaintiffs took the opposite position. Finally the plaintiffs wrote the defendant, after setting out their views, “However, we do not wish to appear critical in this matter and will accept your interpretation of the contract.” This amounted to an agreement between the parties as to the meaning of a doubtful clause in a contract, for the purpose of avoiding further controversy by which both are bound, no matter what its real meaning may be thought to be. The case presented is quite different from a written contract plain on its face, which cannot be modified by custom or conduct, and of which Menage v. Rosenthal, 175 Mass. 358, 361, and O’Brien v. Peek, 198 Mass. 50, 56, are illustrations.

Since the defendant’s exceptions with the alterations made and allowed by the judge under R. L. c. 173, § 110, O’Connell, petitioner, 174 Mass. 253, must be sustained, its petition for the establishment of exceptions, which relates to matters not likely to arise on a new trial, need not be considered and is denied.

In action of Mark & others v. Stuart-Howland Company:

Defendant’s exceptions sustained.

Plaintiffs’ exceptions-overruled.

Defendant’s petition to establish exceptions denied.

In action of Stuart-Howland Company v. Mark & others:

Plaintiff’s exceptions sustained.