279 F. 19 | 5th Cir. | 1922
Lead Opinion
The defendant, the Texas Company, entered into a contract with the plaintiff, Pensacola Maritime Corporation, for the sale to it of—
*21 “all of the bunker oil sold by the purchaser [plaintiff! to vessels in the port of Pensacola, Florida, from August 1, 1919, to September 80, 1920. Seller is not obligated to deliver more than 20,000 barrels in any calendar month, except as follows: (1) The purchaser shall have the right to take an additional 15,000 barrels in any month or a total of 35,000 barrels on 10 days’ written notice to the seller. (2) The purchaser shall have the right to take a further additional 15,000 barrels in any month or a total of 50,000 barrels on 30 days’ written notice. But in case the purchaser gives notice of such additional requirements purchaser shall be .obligated to take the oil called for in such notice at the time indicated. Prices are f. o. b. at purchaser’s vessels alongside seller’s dock at Pensacola, Florida; seller to pump aboard ship; seller’s responsibility ends at ship’s rails. * * * Terms: Cash on completion of delivery. Place of payment: Seller’s Pensacola office.”
The contract made the printed conditions on the reverse side thereof, so far as applicable, parts of the contract. The portions thereof pertinent to this case are the following:
“By this memorandum the seller sells and agrees to deliver and the purchaser purchases and agrees to pay for the ;goods mentioned within. Unless otherwise stated in this memorandum, delivery shall be deemed completo when goods properly consigned are placed free on board boats, and no stipulation, agreement or understanding of the parties shall be valid or enforceable unless embodied in this memorandum or covered by these provisions. * * *
“Payments: * * * A failure to pay any amount when due may at the option of the seller terminate the contract as to further deliveries and no forbearance or course of dealing shall affect this right of the seller.”
No orders were given by the plaintiff for oil thereunder until March 30, 1920, when an order for one vessel was given. During April, 1920, orders for oil for six other vessels at Pensacola, Pla., were given by plaintiff and filled by defendant. On April 23d and May 1st, the plaintiff notified the defendant of additional requirements for oil for vessels at Pensacola to arrive during May. On May 3, 1920, about 5 p. m., defendant’s agent delivered to plaintiff a notice, dated May 2d, stating that defendant.thereby canceled said contract as of 6 o’clock a. m., May 3d. The cancellation was stated to be authorized by the terms and conditions of the contract, particularly the paragraph entitled “Payments.”
No further deliveries of oil were made after said time. At the time said notice was given, the plaintiff had paid for all oil previously delivered, no notice of any purpose to insist on payment being made at the time provided by contract, or of a purpose to cancel the contract as to future deliveries, was given except the notice delivered on May 3d. Plaintiff immediately notified defendant that it denied having breached the contract, and demanded a specification of the breaches claimed by defendant; also that it had sold all oil provided for by the contract, 50,000 barrels per month, and would take and pay for the same. No reply to this letter appears in the record.
Suit was commenced on June 7, 1920, for breach of said contract. In an amendment to its declaration, plaintiff averred that, in addition to the consideration stated in said contract, the plaintiff, at and before the making thereof, promised defendant that it would endeavor to sell to such vessels the fuel oil mentioned in said contract, and that to accomplish this end plaintiff’s officers and agents would solicit orders,
No demurrer or exception was filed by defendant to the original or amended declaration. The defendant pleaded:
(1) That at the time of entering into said contract plaintiff was not and never had been engaged in the business-of dealing in bunker oil.
(2) That plaintiff was not and never had been so engaged at said time, and made no sales for more than seven months after July, 1919.
(3) After repeating the averments of the last plea, it pleaded that any sales then made were at a time when the price of bunker oil had advanced much beyond' that named in said contract.
By amendment to each of these pleas, it denied that it entered into the contract set up in the amended declaration.
(4) It further pleaded that, by the terms of the contract, payments were to be made on completion of delivery at defendant’s Pensacola office, that a failure to pay any amount when due might at the option of the seller terminate the contract as to further deliveries, and that no forbearance or course of dealing should affect this right of the defendant; that prior to the giving of the notice of May 3d, stated in said declaration, and to the refusal of the defendant to deliver oil, plaintiff had failed to pay, when due, the amount due the defendant for oil previously ordered by plaintiff and delivered.
‘The plaintiff joined issue on all of said pleas, and in addition filed a special replication to said fourth plea, averring that all oil had been paid for before the giving of the notice of May 3d, and that defendant had never given any notice that it insisted on payments being made at the time provided by said contract, nor that it would terminate the contract as to future deliveries for failure to make any payment promptly when due. A demurrer to this replication was made and overruled, and issue joined thereon. Subsequently the defendant admitted the truth of the statements therein made.
The court charged' the jury that, if they found for the plaintiff, they must find the amount of difference between the contract price and the market price at the several times fixed for delivery on 235,000 barrels of oil, to be delivered 35,000 barrels in May, 1920, and 50,000 barrels in each of the months, June to September, both inclusive, with interest at 8 per cent, from the 1st of each succeeding month, $559,167.89. The jury returned a verdict for the plaintiff for said amount.
The questions raised in this case, and insisted upon in the argument, were:
(1) That the contract was void' for want of consideration, plaintiff not having, at the time it was made or before said time, ever engaged in the business of selling bunker oil, and not binding itself to take any particular quantity of oil.
(3) That the evidence in said case did not prove said alleged additional consideration.
(4) That the plea alleging the failure of plaintiff to pay when due the sums owed for oil furnished was good, and that the replication alleging payment of all sums ky plaintiff before, and without, any notice hy defendant of an intention to demand prompt payment, or to exercise the option to declare said contract terminated if such payment was not promptly made, was not a good reply, and that the court should have sustained the demurrer to said replication.
(5) The errors assigned to the charge were: The failure to give several requests of the defendant, and the instruction given that, if the jury found for the plaintiff, they must find the amount figured out on the tabulated statement furnished by plaintiff, amounting, principal and interest, to $559,167.89.
The contract was an undertaking on thé purchaser’s part to buy all of its requirements at Pensacola- from the defendant. It clearly agreed not to buy for such requirements during the terms of said contract, except from the defendant. The defendant agreed to sell to plaintiff all such requirements up to certain fixed quantities. Here was the consideration of a promise both to do and to refrain from doing a certain thing as a consideration for the promise to sell certain goods at fixed prices. It was not a mere undertaking to buy what plainti ff might desire, but an undertaking to take all of its needs from defendant alone, within the quantities stated.
If the purchaser, during the first 60 days of the contract, had placed contracts with ships coming to Pensacola for all of the oil contracted to he furnished, could the seller have declined to furnish the oil, on the ground that the contract was too indefinite to be binding? Or if the purchaser, during each month of the contract, had required oil for ships at Pensacola to the full amount called for by the contract, and had declined taking it from the seller, would not the seller have had a good cause of action against the purchaser ?
There would have been no failure of certainty as to the proof of the damages in such cases. The obligation to take all oil needed in its business of furnishing bunker oil to ships, which business, though new,
“The contract did not lack mutuality of obligation. While defendant promised to buy of plaintiff all the lumber of a certain quality that plaintiff might own during the season, plaintiff bound itself, if it did manufacture or acquire any such, lumber, to sell all of it to defendant and to no one else. Thus plaintiff deprived itself of the right to sell lumber to whom it pleased. The promise to restrict its freedom by giving up its right to sell to others was real and definite. It was the substantial and contemplated consideration for defendant’s promise to buy all that plaintiff might own during the season. There was the mutuality of obligation essential to a bilateral contract; there was the consideration essential to-the validity of any contract. Conley Camera Co. v. Multiscope & Film Co., 216 Fed. 892, 183 C. C. A. 96; Burgess Sulphite Fiber Co. v. Broomfield, 180 Mass. 283, 62 N. E. 367. That the plaintiff did •not bind itself to acquire or manufacture any such lumber is immaterial. Its promise to deal with defendant was the valid consideration for the obligation by defendant — a consideration that made the undertaking of the other party binding and enforceable. With regard to the question of uncertainty, a contract is void (save for the possibility of reformation in equity), because of uncertainty, only when it is so worded that the intention of the parties cannot be deduced therefrom. If the intention be clear, the mere uncertainty of the amount involved does not invalidate the obligation, however it may affect the possibility of proving damages for a breach. In the present ease the preliminary negotiations demonstrate that defendant wanted to secure all such lumber that it possibly could obtain, without limit,. and without binding plaintiff absolutely and under all circumstances to deliver any lumber. The parties had a right to make such a contract, even though the amount that would be deliverable thereunder was not specified, and was in a sense optional with the vendor; and this they did, in terms which are clear and certain.” Ramey Lumber Co. v. John Schroeder Lumber Co., 237 Fed. 39, 43, 44, 150 C. C. A. 241, 245, 246.
As has been well said :
“Though it may be true that a seller by ceasing to manufacture may relieve himself from any performance, and still keep a promise to sell all the goods he manufactures, and similarly a buyer by going out of business may avoid performance, while still observing the terms of an agreement to buy all that he requires, these results can be obtained only by doing something which is in itself a legal detriment, namely, the cessation of business. Even a promise to buy or sell only as much as the promisor chooses is a sufficient consideration, when coupled with the agreement that whatever the buyer or seller chooses to buy or sell he will buy from or sell to the promisee. To put the matter in another way — the promise of a seller not to manufacture, except for the buyer, or the promise of a buyer not to buy, except from a particular seller, is clearly a promise to do something detrimental. A few cases seem to admit that, though a contract to buy and sell the requirements or output of a particular factory is a valid contract, an agreement which gives the buyer an*25 option to take no goods is invalid, although the buyer agrees that, if he should buy any goods of the kind in question from any one, he would buy them from the seller. These decisions cannot be supported. Though a court will be reluctant to give a contract a construction which gives the buyer so wide a power, unless the language of the eoniract clearly requires that construction, but will rather seek to find the more reasonable intention that the seller has agreed, to sell and the buyer to take the buyer’s normal or ordinary needs, subject to the slight variation of business continuing on substantially the same scale, yet, if the wider power is given, the contract is not without sufficient consideration.” 1 Williston on Contracts, § 104.
Iu the case at bar the contract provided against the purchaser being induced, by a fall in the price of oil, to refrain from supplying bunker oil to vessels at Pensacola by the agreement of the seller to reduce its price to meet such, a condition. See, also, Ellis v. Dodge Bros., 246 Fed. 764, 159 C. C. A. 66; T. W. Jenkins v. Anaheim Sugar Co., 247 Fed. 958, 960, 160 C. C. A. 658, L. R. A. 1918E, 293; 1 Page on Contracts. (2d Ed.) §§ 579, 580.
We do not think that the cases declining to sustain such contracts, as valid obligations, are sound in principle, or in consonance with the better authority. We question if this case would fall in that class where the purchaser did not have an established business. While the plaintiff had not previously dealt in bunker oil, it had an established business of supplying fuel to ships coming to Pensacola. It had for quite a time dealt in supplying coal to vessels as fuel. It was adding to that fuel the additional fuel — oil.
Considerable correspondence showing that plaintiff, just before the contract entered into was signed, in the city of New York, had in said city an agent bound for Europe for the purpose of promoting its business, including the seeking of contracts to furnish fuel to vessels, including bunker oil, and that defendant was advised of this fact, and that said plaintiff received and took considerable literature from defendant advocating the use of bunker oil of the defendant company; but no undertaking, on the part of the plaintiff, was shown to send said agent or promote for defendant the sale of defendant’s oils. These letters tended to show activity and the incurring of expense on the part of plaintiff in seeking business for itself looking to the sale of defendant’s oils. They were objected to by the defendant as seeking to introduce an additional provision to said contract, claimed to have been made before it was executed, and as being illegal for that purpose.
While the objection that this case is an attempt to alter an existing written contract by the introduction of an antecedent or contemporaneous agreement covering the subject-matter might have been good, bad the objection been made to the plaintiff’s pleadings before joining issue on these averments, a failure to object by demurrer or otherwise, and a plea denying the truth of this amendment so averring, entitled
4. Defendant’s fourth plea alleged' that the plaintiff had failed to make payments for oil delivered under said contract “when due,” and that the defendant had canceled the contract as to further deliveries on May 3, 1920. Plaintiff by a first replication denied said plea; by a second replication it replied that it had paid for all oil delivered before said notice of May 3d was given, and defendant had never given any notice that it would insist on payments being made at the time provided by said contract, or that it would terminate the same as to future deliveries for failure to make prompt payments. The court overruled a demurrer to said second replication, and this is one of the errors assigned. The truth of the second replication was subsequently admitted. No proof in support of the plea was offered.
Taking the plea and the replication together, all their averments show is that the plaintiff had' failed-to pay the sums due immediately on the completion of the delivery of the oil, but that before any complaint had been made by the defendant, or any objection to its course indicated, it had paid all sums due for oil which had been delivered. It is entirely consistent with the averments of the plea that all payments were made in a reasonable time after delivery. It will not be contended that, had this contract contained only the provision that the terms of payment for the oil should be cash upon completion of delivery, the above state of facts would have shown a breach on the part of the plaintiff for which defendant, after receiving payment, lawfully could refuse to comply with the contract. The question, therefore,, is whether the further provision of the contract, to wit, that “a failure to pay any amount when due may at the option of the seller terminate the contract as to further deliveries, and no forbearance or course of dealing shall affect this right of the seller,” would authorize the defendant to exercise this option, after receiving payment before demand and without objection or notice of a purpose to terminate.
17} The words, “a failure to pay any amount when due may at the seller's option terminate said contract,” do not necessarily mean that the contract is terminated for failure to pay immediately on completion of delivery. It may well mean that a failure to pay when due, while existing, gives to the seller the option to declare the contract for future deliveries canceled. It is insisted that it is the failure to pay when due that gives the option, and that, unless such option is exercised while there is an existing failure to pay what is due, when there is nothing due, there is no option to declare the contract terminated.
Such payment, accepted, without demur, before any exercise of the option to terminate, is a good reply to the alleged forfeiture. Mound Mines Co. v. Hawthorne, 173 Fed. 882, 886, 97 C. C. A. 394; Stevinson v. Joy, 164 Cal. 279, 128 Pac. 751, 753; Cash v. Mesenheimer, 53 Wash. 576, 102 Pac. 429; Lent v. B. & M. R. Co., 11 Neb. 201, 8 N. W. 431; Monson v. Bragdon, 159 Ill. 61, 42 N. E. 383, 385; Keefe, v. Fairfield, 184 Mass. 334, 68 N. E. 342; McDonald v. Kansas City Bolt & Nut Co., 147 Fed. 360, 79 C. C. A. 298, 8 L. R. A. (N. S.) 1110; Little Rock Cooperage Co. v. Lanier Co., 83 Ark. 548, 104 S. W. 221; Henningsen v. Tonopah, etc., R. R. Co., 33 Nev. 208, 111 Pac. 36, 119 Pac. 774, Ann. Cas. 1913D, 1008, 1018. We have found no case where merely a failure to pay strictly at the time the payment was due, followed by a payment accepted without demur or protest, has been held to leave open the option to thereafter terminate for the default, which no longer exists at the time when the option is attempted to be exercised.
The facts in this case show that seven ships were bunkered under this contract by the defendant for the plaintiff during the month of April; one on April 1st, the others between the 20th and 30th. It is quite consistent with the allegations of -this plea that the failure to pay when due may not have extended beyond 24 hours after any one of the payments. In fact, construing this plea against the pleader, it is consistent with but one default in payment having occurred, namely,
5. A number of errors are assigned to the charges given, and to the refusal to give the several requests to charge made by the defendant. These alleged errors are sufficiently disposed of by what has been ruled above, and by what is further recited as to the directions given to the jury by the court as to the amount they must find, if they found for the plaintiff, and as to what is hereinafter said concerning the evidence submitted upon the subject of damages.
The declaration in this case alleged that plaintiff had notified dfefendant that it would require 35,000 barrels of oil in the month of May, 1920, and 50,000 barrels of oil in each of the following months, to and including September, 1920, which was the last delivery provided for by the contract. The proof in the case as to the oil which plaintiff sold or could have sold was 4,700 barrels to the steamer Munsomo and 10,-000 barrels to the steamer Ohioan, which oil the defendant failed to deliver. The plaintiff’s president also testified'that prior to May 3d he had made a tentative contract for the sale of defendant’s oil, demanded in his letter of May 4th to the Texas Company, to wit, 35,000 barrels in May and 50,000 barrels in the five succeeding months, but that it was never consummated', because of the notice of Ma}*- 3d. No testimony was given or offered as to the nature of such contract, the price at which the oil was to be taken, with whom the contract was made, or whether the oil was for delivery at the port of Pensacola, nor as to how far said negotiation had gone. No other testimony was offered as to actual or probable sales. Whether any proceedings were had to hold plaintiff liable for its failure to furnish oil to the Munsomo or the Ohioan was not shown. The proof was that the price at which this oil had been sold to these vessels was 79 cents per barrel below the market price at the time o'f sale.
The court charged the jury that, if they found for the plaintiff, the damages would be the difference between the price of grade C oil, named in the contract, and the market price for such grade at Pensacola, Fla., at the. several times fixed for delivery, for the quantities required to be delivered, from May 3, 1920, to September 30, 1920, with interest at 8 per cent. ,per annum on the amount so found from the 1st day of the month next succeeding the month in which the delivery was required, the interest to be calculated up to May 24, 1921. Plaintiff’s counsel had prepared a tabulated statement, based upon the delivery of 235,000 barrels of oil during the months May to September, 1920, as being due by the defendant to the plaintiff, with interest thereon calculated according to the- charge above stated, and had by permission of the court handed the same to the jury. In respect to this statement the court charged the jury that if,'under the charge of the
After the jury had been out for some time, they were brought back into the court, and upon inquiry by the court stated they would like further instructions as to the amount of damages. Thereupon the court reread to the jury that portion of his charge previously given relating to the measure of damages, adding the words: “The amount is fixed in the tabulated memorandum handed you” (referring to the tabulated statement made by plaintiff’s counsel given to the jury). One of the jurors then asked the judge: “D;oes that mean that, if we find for the plaintiff, we must find the amount in that memorandum?” The trial judge answered: “Yes.” To which instructions the defendant excepted.
The defendant requested the court to charge the jury that under the evidence in the case they should find for the defendant; also that, if they found for the plaintiff, the measure of its damages would be restricted to the difference between the contract price and the resale price for all bunker oils which the evidence showed plaintiff had sold for delivery to vessels at the port of Pensacola in the period ending September 30, 1920, and which defendant failed to deliver; also that, if the jury found for the plaintiff, plaintiff was only entitled to recover damages for loss of profits on completed sales of bunker oil made in the port of Pensacola, and such anticipated profits as the plaint’ ff showed with reasonable certainty would have resulted to the plaintiff had the defendant not canceled said contract, and that the average profit per month made by the plaintiff on sales during the first nine months of the contract constituted the basis during the remaining five months. Defendant also requested1 the court- to charge that the damages should he estimated upon the number of barrels of oil which the evidence showed the plaintiff had sold, or procured contracts for the sale of, to vessels in the port of Pensacola, and such other oil as plaintiff could have sold during the remaining months of the contract, had tiie performance thereof not been terminated. All of such charges the court refused, and the defendant excepted.
f 101 We think that the court erred in instructing the jury that, if they found for the plaintiff, they must find the amount shown in said tabulated statement. This treated said contract as one for the purchase of 235,COd barrels of oil by the plaintiff from the defendant, which the defendant was bound to deliver, and that the plaintiff was entitled to recover the difference between the contract price and the. market price, on this number of barrels; whereas we think that this contract was one by which the defendant obligated itself to furnish to the plaintiff, and plaintiff bound itself to take from the defendant, all of the oil which it needed to supply vessels at the port of Pensacola. The correspondence in the. case shows clearly that the first contract proposed was one which contemplated the sale of the defendant’s oil by plaintiff at ports other than Pensacola, that defendant objected to making this contract, and that the contract entered into was expressly limited to the furnishing of oil to plaintiff for supplying vessels at said port of Pensacola. The contract itself clearly indicates this, as the deliveries by the
We think, therefore, that the court should have charged the jury, as requested, that the number of barrels of oil to be computed was such as the plaintiff had sold, or procured contracts for the sale of, to vessels in the port of Pensacola, and such other oil as from the evidence it appeared that plaintiff could have sold during the remaining months of the contract had its performance not been terminated.
Reversed and remanded.
Dissenting Opinion
(dissenting in part). I concur in the foregoing opinion, except the part of it which deals with the demurrer to the special replication to plea 4. In my opinion that demurrer should have been sustained. It was clearly disclosed by that replication that nothing but the defendant’s acceptance of the payment after it was due, without giving notice of its exercise of the option to terminate the contract, as to further deliveries, was relied on to support the claim that the option had ceased to exist when the defendant undertook to exercise it. By the contract the defendant agreed to make sales of oil only for cash on delivery. A failure to pay any amount when due conferred on the defendant the option to terminate the contract as to further deliveries, and it was expressly stipulated that “no forbearance or course of dealing shall affect this right of the seller.” The option was given as a means of enabling the defendant to terminate its obligation to make sales of oil to the plaintiff in the event of the latter’s “failure to pay any amount when due.”
In my opinion the quoted provision is deprived of the effect its language shows it was intended to have by a decision that the seller lost that right by merely failing to exercise it prior to or at. the time of its acceptance of the amount of a payment which was not made when it was due. The writer understands that the law of election, or of estoppel or waiver, must be relied on to support a claim that a party having two contract rights loses one of them as a consequence of his exercising the other. Upon the happening of the alleged failure by the plaintiff to make a payment when it was due, the defendant was nut put to an election between terminating the contract because of that default and accepting payment of the overdue amount, as, upon the happening of the default, it had both the right to exact payment of that amount and the right to terminate the contract as to further deliveries because of the failure to pay that amount when it was due. The exercise of one right was not inconsistent with the exercise of the other. The law of election is applicable only when the rights or remedies which may he availed of are inconsistent. Thomas v. Sugarman, 218 U. S. 129, 30 Sup. Ct. 650, 54 L. Ed. 967, 29 L. R. A. (N. S.) 250; Robb v. Vos, 155 U. S. 13-43, 15 Sup. Ct. 4, 39 L. Ed. 52; 2 Williston on Contracts, § 688, pp. 1331, 1332.
The acceptance of the amount overdue for oil already delivered was entirely consistent with a termination of the contract as to further deliveries. No ground of estoppel is disclosed. It is not made to appear that the plaintiff changed its position to its prejudice between the time of the failure to make a payment when it was due and the time of the defendant’s exercise of the option to terminate the contract as to further deliveries. Even if the stipulation in question had not contained the provision against the seller’s right to terminate being affected by any forbearance or course of dea.hTg, that rifdit was exercisable within a, reasonable time. There is nothing to indicate that the exercise of