219 F. 818 | 3rd Cir. | 1915
The Pittsburg-Buffalo Company, the plaintiff corporation, hereafter referred to as the Coal Company, was in the business of selling coal for mine operators, and was under contract to provide a market, for and to sell the entire product of the Annabelle mines. J. K. Dimmick & Co. was a copartnership engaged in thé business of selling coal chiefly to consumers. On January 20, 1912, the Coal Company entered into a contract with Dimmick & Co., whereby the former appointed the latter its exclusive agent for the sale of coal from the Annabelle mines, in territory which may be described as the New England states, and also its agent for the sale of the same coal in a portion of the Middle Atlantic states, reserving to itself the right to sell Annabelle coal in the latter district directly through certain of its agencies then established, and to fill orders for Annabelle coal for sale outside of the districts described, and to name
To secure the full performance of the contract, each party executed and delivered to the other a bond in the sum of $25,000, upon which the American Fidelity Company, the defendant in this action, and hereafter referred to as the Surety Company, became surety. Upon the bond executed by Dimmick & Co. and the Surety Company to the Coal Company, this action was brought. The breaches of the contract relied upon for recovery on the bond had their origin in an order made on November 9, 1912, by Dimmick & Co. upon the Coal Company, and by the latter accepted and in part performed. By this order Dimmick & Co. directed the Coal Company to ship and consign to them at Curtis Bay Piers, Baltimore, Md., 30,000 tons of Annabelle coal in monthly installments of 10,000 tons, beginning December 1st thereafter, at the net price of $1.40 per ton, payment on the 20lh of the month following, confirming an agreement previously made between officers of the two companies. In December, 1912, 10,000 tons were shipped, and on January 2, 1913, notes were given in an amount equal to the total purchase price thereof, maturing upon dates beyond January 20, 1913, and when due were paid. During the month of January, 1913, pursuant to the same order, a quantity of coal was shipped by the Coal Company to Dimmick & Co., for which the Coal Company was not paid, and for which it claimed payment in the sum of $9,390.07, which amount represents the selling price of the coal, less commissions retained, pursuant to the contract. Thereafter Dimmick & Co., notified the Coal Company to cease shipments and refused to take more coal. The Coal Company was able to sell for the account o f Dimmick & Co. only a portion of the coal contracted for delivery in the month of February, and thereby sustained a loss of $2,762.62. This sum, and the aforementioned sum of $9,390.07, make a total sum of $12,152.69, which, together with interest thereon from March 20, 1913, is the amount which the Coal Company seeks to recover in this action.
The Surety Company defended this action upon the ground that the order made and accepted on November 9, 1912, and in part performed by both parties, was not made under the contract upon which it was surety, or, if under that contract, it was made after the terms thereoE had been departed from and materially altered and varied, without notice to it, thereby discharging it from its surety obligation. The par
In denying a motion for a new trial, and entering judgment on the verdict, the court delivered an opinion wherein it appears that the grounds upon which it directed a verdict for the defendant were acts which, though related to those of Dimmick & Co., were more directly attributed to the Coal Company, and for convenience are named and enumerated as follows: The Coal Company (8) entered into other contracts with Dimmick & Co. for the sale of coal, without notice to the surety; (9) shipped coal into the designated territory from other mines than from the Annabelle mines; (10) shipped coal and coke upon terms as to profits and rates of payment different from those fixed by the contract; and (11) instead of requiring Dimmick & Co. to make payments on the 20th of each month, the Coal Company permitted them to make payments at different periods and by promissoiy notes. ' ,
The one question before the court on review, based upon the one error assigned, is whether the trial court erred in directing the jury to return a verdict for the defendant. At the trial there was no dispute about the execution of the contract of Januarv 20, 1912, the delivery and acceptance of the order of November 9, 1912, the amount of coal delivered pursuant thereto, its price, the failure of Dimmick & Co. to make payment therefor, and the result in damages to the Coal Company. The testimony was addressed principally to questions whether certain acts of Dimmick & Co. were departures from the contract, whether the Coal Company had knowledge thereof or gave assent thereto, whether contracts for the sale of coal other than Annabelle coal were made between the two companies, and whether Dimmick & Co. sold coal at prices other than at the price stipulated, and disposed of the same for export and in territory other than that described in the contract. Of the several questions involved in the confusion of the controversy, there are three which in our opinion stand out boldly.
We find two other questions raised by the testimony. Assuming that the jury found that the order of November 9, 1912, and its acceptance, did not constitute a separate and independent contract, but was an order made or attempted to be made under the terms of the contract of January 20, 1912, then the second question is whether the parties to the contract had by their words or acts altered or changed its terms, and, if such was found to have been the case, then, third, whether the alterations or changes extended to the essential features of the contract, and were of a materiality that discharged the surety from its liability.
“In determining whether a surety is discharged by an alteration of the principal contract without his consent, the question is not whether the change was or could be prejudicial to him, but whether it effected a material alteration of the agreement to which his undertaking of suretyship related; and, if it did, he is discharged, even though the change may have been beneficial to him.”
In the same case, Judge Dallas, speaking for this court and quoting from Cross v. Allen, 141 U. S. 537, 12 Sup. Ct. 71, 35 L. Ed. 843, stated the rule to be:
*824 “That any material change in the contract on which he is a surety, made by the principal parties to it without his assent, discharges the surety, even though he may be benefited by such change; the reason being that he has not assented- to the contract in its altered form, and has a right to stand upon the very terms of his undertaking.”
In Bensinger v. Wren, 100 Pa. 503, the court said that:
A surety “has a right to stand upon the very terms of his obligation and is bound no further. Any unauthorized variation in an agreement which a surety has signed, that may * * * substitute an agreement different from that which he came into, discharges him.” Miller v. Stewart, 9 Wheat. 680, 6 L. Ed. 189; Smith v. U. S., 2 Wall. 219, 17 L. Ed. 788.
The Surety Company, however, takes a position far in advance of this, and maintains, with respect to certain matters, that by the conduct of Dimmick & Co., without regard to the knowledge of or acquiescence therein on the part of the Coal Company, it is nevertheless discharged from its obligation of suretyship, and asks us to hold as a matter of law that if Dimmick & Co. sold a ton of Annabelle coal outside of their prescribed territory, or at a price that yielded more or less profit than that fixed by the commission named in the contract, though the Coal Company neither assented to, acquiesced in, nor was informed of such a sale, an alteration in the contract was made, though made by Dimmick & Co. alone, which released the Surety Company from its obligation to the Coal Company upon the defaulted payment of Dimmick & Co. for coal purchased, contending that by its obligation of surety it had not undertaken to protect and save harmless the Coal Company from acts of Dimmick & Co. done otherwise than in the manner contemplated by the contract.
The contention that the Coal Company shipped coal to Dimmick & Co. upon terms as to profits and rates of payment different from those prescribed by the contract presents questions for the jury, first, whether the coal so shipped was Annabelle coal; second, whether such shipments were made under the contract, and whether the terms as to prices and payments were varied from the terms thereof; and, if found so to be, then, under proper instructions from the court upon the law, third, whether the same were material changes in the essential features of the contract. In giving to certain of the terms of the contract in suit the interpretations which appear in this opinion, we have restricted our consideration to those phases of it upon which directly bear the questions presented for review. We disclaim an at
The judgment below is reversed, and a new venire is awarded.