40 N.J. Eq. 612 | N.J. | 1885
The opinion of the court was delivered by
The rights of the parties to this controversy grow out of the following contract under seal:
“ This indenture, made the second day of June, A. D. one thousand eight hundred and eighty-one, between Charles W. Trotter, of the city of Brooklyn and state of New York, of the one part, and Charles A. Heckscher, of the city of Philadelphia and state of Pennsylvania, coal-miner and shipper of coal, of the other part, witnesseth : That whereas one James L. Curtis, of the city of New York, sole surviving trustee of the Franklinite Mining Company, did, by indenture bearing date the sixth day of March, A. D. one thousand
“ Now, this indenture witnesseth: That the said Charles W. Trotter, for and in consideration of the sum of one dollar, to him well and truly paid, the receipt whereof is hereby acknowledged, and of the covenants hereinafter made by, and on the part of, the said Charles A. Heekscher, hereby, for himself, his heirs, executors and administrators, covenants, promises and agrees to and with the said Charles A. Heekscher, his associates, executors, administrators and assigns, as follows:
“ First. That he, the said Charles W. Trotter, is in undisturbed and undisputed possession of the premises mentioned in the said indenture or lease of Maroh sixth, A. x>. one thousand eight hundred and seventy-seven, and has all the rights and privileges for the term of thirty years from the said sixth day of March, A. d. one thousand eight hundred and seventy-seven, to enter into this indenture and execute the covenants herein.
“ Second. That he, the said Charles W. Trotter, his executors, administrators- or assigns, shall and will deliver to the said Charles A. Heekscher, his associates, executors, administrators and assigns, on board the railroad cars at Franklin, Sussex county, and state of New Jersey, twelve thousand tons (each ton being of the weight of two thousand two hundred and forty pounds) of franklinite ore, in regular monthly shipments of one thousand tons, or thereabouts, each month, commencing from the date of this agreement, the said monthly deliveries not to fall short of nine hundred and ninety tons, nor be in excess of one thousand and ten tons; and furthermore, that neither the said Charles W. Trotter nor his executors, administrators or assigns, or any of them, will, during the continuance of this agreement, sell, furnish or deliver to any person or persons any of the ore of said mine, vein, lode or bed, or make any contract so to do, of a quality equal to or exceeding twenty-six percent. of oxide of zinc.
“ Third. That the said Charles W. Trotter, for himself, his heirs, executors, administrators and assigns, hereby guarantees that all the said ore so to be delivered as aforesaid, shall contain at least twenty-six per. cent, of oxide of zinc, and the said Charles A. Heekscher, his associates, executors, administrators or assigns, shall not be compelled to take or pay for any ore containing less than twenty-six per cent, of oxide of zinc, and if the assay made from time to time by the said Charles A. Heekscher, his associates, executors, administrators and assigns, to determine the percentage of oxide of zinc, are not satisfactory to the said Charles W. Trotter, his executors, administrators and assigns, then the said Charles W. Trotter shall appoint an assayer to test the quality of said ore as to the percentage of oxide of zinc, and in case the said two assayers shall not agree as to the percentage of said oxide of zinc, then the said parties hereto shall jointly appoint some third person — a disinterested, competent chemist of respectable standing — to determine the percentage of
“Fourth. That if at any time during the continuance of this agreement, the said Charles W. Trotter, his heirs, executors, administrators or assigns, shall fail for thirty days to deliver the monthly quantity of ore, as above agreed upon, the said Charles A. Heckscher, his associates, executors, administrators ■and assigns, may, at his or their option, after thirty days’ notice to the said Charles W. Trotter, take possession of the mine, vein, lode or bed of franklinite ore, and all machinery, tools and appliances necessary and required to he used in connection with said mine and works, and shall have the free and uninterrupted right and privilege of entering into and upon the said premises, ■and any and all parts thereof, and shall have the full and uninterrupted right and privilege of taking therefrom and applying the amount of ore above specified to his and their own use, charging to the said Charles W. Trotter the cost of said mining and of the delivery of said ores on board the cars, he, the said Charles W. Trotter, paying for the same. And the said Charles W. Trotter hereby, for himself and his heirs, executors, administrators and assigns, guarantees that the said Charles A. Heckscher, his associates, executors, administrators and assigns, shall have peaceable and uninterrupted possession of said mine, vein, lode or bed of franklinite ore until the inability or failure of the said Charles W. Trotter to supply said ore as agreed upon shall be satisfactorily removed. And during such .occupation and working of said mine, vein, lode or bed of franklinite ore, thé said Charles A. Heckscher, his associates, executors, administrators and assigns, shall have the privilege and right either to employ the workmen there engaged, or to dismiss them, or any of them, and employ others.
“Fifth. That at the expiration of the time limited in this indenture for the taking of the said twelve thousand tons, the said Charles A. Heckscher, his associates, executors, administrators and assigns shall have the right, option and privilege of taking thereafter regular monthly quantities of said ore for
“Sixth. That if the said Charles A. Heekscher, his associates, executors, administrators or assigns, shall elect to take, after the expiration of the term for the delivery of the twelve thousand tons above mentioned, a minimum quantity of twelve thousand tons of said ore per annum for the additional term, which they have an option under section 5 of this indenture, then and in that case the said Charles W. Trotter hereby, for himself, his heirs, executors, administrators and assigns, covenants and agrees not to sell or dispose of any ores assaying twenty-six per cent, or over of oxide of zinc, to any other person or persons, or corporation or corporations.
“ Seventh. That if the said Charles W. Trotter, his executors, administrators or assigns, shall obtain possession of any adjoining mine, vein, lode or bed, or any portion thereof, he or they shall and will give to the said Charles A. Heekscher, his associates, executors, administrators and assigns, the first option of purchasing the ores therefrom, for the same price and under the same terms, conditions and stipulations, in every respect, as are herein expressed in reference to the twelve thousand tons above mentioned.
“ Eighth. That the said Charles A. Heekscher, his associates, executors, administrators and assigns, shall have the right and privilege of storing all ore obtained hereunder on the surface of the property held by the said Charles W. Trotter, at or near the mines, free of charge therefor.
“Ninth. That this contract shall terminate and be considered void in case the ores or mines shall give out or become exhausted, and if the Lehigh Zinc Works shall be destroyed or become useless, the said Charles A. Heekscher, his heirs, associates, executors, administrators or assigns, shall have the privilege, if he or they desire it, also to rescind this contract, and all his and their obligations thereunder. If, however, the said mines shall be incapable of producing the quantity of ore required by this agreement of at least'twenty-six per cent, of oxide of zinc by assay, but shall be capable of producing an inferior quality of ore below the said twenty-six per cent, of oxide of zinc, the said Charles A. Heekscher, his associates, executors, administrators and assigns, shall have the piivilege of taking any quantity of the said inferior ore at such rate as may be agreed upon between the parties, such price not to exceed three dollars and seventy-five cents per ton of two thousand two hundred and forty pounds, or the market value of said ore as mangan iron ore.
“ Tenth. At all times during the continuance of this agreement and the ox-
“ In witness whereof the parties hereto have hereunto set their respective hands and seals the date first above mentioned.
“ Charles W. Trotter. [l. s.]
“ G. A. Heokscher. [l. s.]
“ Signed, sealed and delivered in the presence of us. The words, ‘ by assay,’ first interlined between the twenty-third and twenty-fourth lines of the third page, and between the sixteenth and seventeenth lines of the seventh page, and the words, ‘ or the market value of said ore as mangan iron ore,’ between the twenty-fifth and twenty-sixth lines of the seventh page.
“ George Northrop.
“Wm. Bracken.”
On June 8tb, 1882, Charles W. Trotter filed his bill of com-' plainant against Charles A. Heckseher and his assigns, the Lehigh Zinc and Iron Company, Limited, praying a decree that the foregoing contract required the defendants to determine, before the delivery upon the cars at Eranklin of the ores mined under the contract, whether or not they would take the said ore, and therefore whether or not the same contained as much as 26 per cent, of oxide of zinc, and hence that it was the duty of the defendants to cause an assay to be made on or prior to the delivery, and to report the same to the complainant, or that, in default thereof, the reception of said ore by the defendants concluded them, and estopped them from denying that the ore contained at least 26 per cent, of zinc oxide, and was to be paid for accordingly; praying, further, a decree that the defendants were not entitled to claim or have any benefit from the contract, or to enforce any of its provisions until payment should be made of the amount due the complainant for ore delivered, and that they were especially not entitled to take possession of the mine under the agreement until they had paid to the complainant all that was due him, nor then, if on such payment the complainant should proceed without delay to mine and deliver ore, according to the contract. The bill further prays that an account may be
The defendants duly answered the bill, and in July, 1882, filed a cross-bill, praying that the specific performance of the contract might be decreed, setting out their views of its meaning, alleging that there was nothing due to the complainant for ore delivered, but, on the contrary, that he had been overpaid, averring that they had sustained great loss by reason of his failure to make the stipulated deliveries of ore, and praying that their damages so caused might be assessed and awarded to them by decree, and insisting that they were entitled to possession of the mine and its appliances because of the complainant’s defaults, and asking that he might be enjoined from retaining possession, of the mine and from interfering with them possession.
On October 21st, 1882, the complainant answered this cross-bill, and, after proofs were put in, a final decree was made, against which both parties have taken these appeals.
One important subject of litigation is the right to the possession of the mine.
The contract provides that if complainant shall fail for thirty-days to deliver the monthly quantity of ore as agreed upon (not less than 990 tons nor more than 1,010 tons per month), then defendants may, at their option, after thirty days’ notice to complainant, take possession of the mine &c.
It is undisputed that complainant did not make the stipulated monthly deliveries ; that after June, 1881, during which full deliveries were waived by mutual consent, and only about 238 tons were shipped, the deliveries were as follows :
July, 1881, about 750 tons, making, with June shipments, 988.20 tons; August, 548.10; September, 262.65; October, 624.10; November, 955.55; December, 430.85; January (1882),. 1,076.30; February, 805.25; March, 644.85; April, 1,096.35.
On May 1st, 1882, complainant wrote defendants that he had instructed his superintendent at the mine not to ship any more
It thus appears that on June 11th, 1882, the circumstances which, according to the terms of the bargain, should entitle defendants to possession of the mine, had occurred, viz., complainant had failed for thirty days to deliver the specified amount of' ore, and the thirty days’ notice had been given him. But he insists that he was justified in his failures and. final refusal to deliver by the defaults of defendants. This brings us to a consideration of the defaults charged against defendants.
The first is their refusal to sample and assay the ore before its-removal from Eránklin.
In this we think they did only what they had a right to do-under the contract. According to its terms, assays were to be made by them in the first instance, and no exact time or place is designated therefor. This would allow to them a reasonable discretion as to when and where the process should be conducted* In the absence of any express indication to the contrary, it is a fair presumption that assays were not to be made by them until they got possession of the ore, and as they were to receive possession by delivery on board the railroad cars at Franklin, the inference becomes probable that they were not to assay until the cars were unloaded at their place of destination — the defendants’ works in Bethlehem. This inference is rendered almost necessary when we note the fact that -in the process of sampling and assaying considerable machinery is needed, such as defendants already had at their works, and they could hardly be expected to incur the expense of providing similar machinery at the"mine. The conduct of the parties immediately after entering upon the execution of the contract also shows that they had in contemplation assaying at Bethlehem rather than at Franklin, for on June 24th, 1881, soon after the arrival at Bethlehem of the first shipments of ore, the defendants’ manager wrote to complainant:
To which complainant replied:
. “ Tour method of sampling for assay is as good as can be devised, and fair for both. I would only suggest that you wait until you receive this week’s shipments, about 200 tons, and then take your samples.”
Complainant insists that assaying was required at Franklin, because defendants being bound to take the ore only in case it contained 26 per cent, zinc oxide, they must determine their option before taking it; that is, he contends, before its delivery on the cars. We think, however, that receipt on the cars was not the taking intended by the agreement, but that by such taking was meant the final acceptance of the ore, and that after receipt defendants were entitled to a reasonable opportunity to ascertain whether the ore contained 26 per cent, zinc oxide, and if it did not, to decide whether they would retain it. . This distinction between receipt and acceptance is perfectly well settled in the cases (Berj. on Sales §§ 139, 140), and we deem the right to accept or reject after receipt, if, on testing, the ore proved deficient in zinc, clearly given to the defendants by the contract. In this •respect, therefore, they were not in default.
Complainant’s next contention is that defendants failed to make due payments. This involves the account between the parties.
On complainant’s side must be ascertained the quantity of ore delivered, the percentage of zinc oxide which it contained, and tire prices to be charged for it.
The quantity is not in dispute.
With regard to the percentage of zinc oxide the parties widely differ. Defendants took samples in the manner indicated above by the letter of June 24fch, 1881, and had analyses made by a ■chemist. Complainant independently had samples taken and
On the subject of price, also, the' parties are at variance. Complainant insists that all ores accepted are to be valued as containing at least 26 per cent, of zinc oxide, and therefore worth, at least, $3.75 per ton. Defendants claim that the price of all ores containing less than 26 per cent, of zinc oxide is fixed ■ by the contract (no other agreement being shown) at the market value of the ores as mangan iron ore, that is, $1.67 per ton. The vice-chancellor decided that all ores should -be' estimated according tó the ascertained percentage of zinc oxide contained in them, and that the sliding scale of valuation fixed in the contract for ore containing more than 26 ' per cent, of zinc oxide should be applied also to ore containing less than that proportion until, in the descent, the market value of the ore as mangan iron ore was reached, which value should form a minimum price. The meaning of the contract touching the price of ore having less' than 26 per cent, of zinc oxide, is obscure. After declaring that the price of ore containing 26 per cent, of zinc oxide shall be $3.75 per ton, and that the price of richer ore shall be increased in the proportion of fifty cents per ton for every additional 1 per cent, of zinc oxide, it provides that inferior ore may be taken “ at such rate as may be agreed upon between the parties, such price not to exceed $3.75 per ton, or the market value of said ore as mangan iron ore.” In our opinion, this contemplates two methods for fixing the price of inferior ore; one, by agree-' ment of the parties, which, of course, is unlimited in its scope; the other, for want of such agreement, by judicial determination,, which must not exceed $3.75 per ton, or-the market-value of'
On the basis thus laid down, the amounts due complainant (including small sums for stone not embraced in the contract) .are as follows:
1881. Aug. 15th.......................................... $1,776 28
“ Sept. 15th......................................... 2,160 87
■“ Oct. 15th........................................... • 2,065 77
•“ Nov. 15th......'................................... 2,917 67
4t Dec. 15th.......................................... 4,224 24
“ Feb. 15th.......................................... 2,566 98
“ March 15th........................................ 4,094 70
“ April 15th......................................... 3,053 36
“ May 15th.......................................... 2,017 28
$25,790 55
Against this the undisputed credits are as follows:
1881. June 4th, cash.................................... $6,000 00
“ Oct. 17th, “ .................................... 3,000 00
1882. Jan. 14th, “ .................................... 5,000 00
“ . April 19th, “ .................................... 5,000 00
" “ 30th, expense of hauling ores for complainant December, 1881, to date.............................. 889 08
$19,889 08
It thus appears that, with a fair allowance of interest on advances made to complainant, all the moneys growing due up to and including November 15th, 1881, were paid by defendants in advance; that the moneys growing due on December 15th, 1881, and Januaiy 15th, 1882, were paid by them on January 14th, 1882; that the moneys growing due February 15th, 1882, and a large part of those accruing March 15th, 1882, were paid by them January 19th, 1882, and that, when the complainant gave notice that he would make no further deliveries- of ore, part of the sum due March 15th, and the sum due April 15th, were in arrears, amounting to less than $5,000.
The default of defendants on and after May 1st, 1882, is therefore established, and the question then arises whether such default released complainant from his obligation to deliver ore, and from the consequences which he had agreed should follow on his failure to do so.
The rule applicable to cases of this stamp has been very recently settled in this court by the decision in Blackburn v.
Our judgment, therefore, is, that on June 11th, 1882, defendants became entitled to possession of the mine, and the decree below to the contrary should be reversed.
This substantially disposes of the claims involved in the original bill. The additional matter introduced by the cross-bill is defendants’ prayer to have their damages arising out of com
As a general principle, equity follows the law in the allowance of a set-off. If, however, special circumstances be shown creating an equity to have cross-demands balanced against each other, courts of equity will transcend the rules of law for the protection of such a right. Robbins v. McKnight, 1 Hal. Ch. 642; Black v. Whitall, 1 Stock. 572; Dade v. Irwin, 2 How. (U. S.) 383; Dodd v. Lydall, 1 Hare 333.
It is clear that defendants’ damages could not be set off at law. Their' being unliquidated prevents such a disposition of them under the common statutes of set-off, and the fact that they arose upon the breach of a contract under seal formed, when the decree below was rendered, an obstacle to recouping them under section 129 of the practice act. Rev. p. 868. Nor do they enter naturally into the proper computation of the amount to be allowed for the ore delivered; that ore was worth just as much as it would have been if complainant had fulfilled every iota of his bargain. So that in no aspect could these damages have availed at law to defeat or lessen the recovery for ore delivered. Is there, then, any special circumstance which makes them available in equity? The chief reliance of defendants is placed upon the fact that the damages were caused by a breach of the very contract on which complainant founds his suit. The cases, however, hold that this circumstance does not warrant a court of equity in blending together demands otherwise distinct. In Duncan v. Lyon, 3 Johns. Ch. 351, the complainant and defendant had entered into a sealed contract that the complainant should furnish certain timber to the defendant, which the defendant was to take to Canada and sell, dividing the proceeds with the complainant. The defendant had sued the complainant at law for breach of the covenant to furnish the timber. The complainant’s bill sought an account of the proceeds of sale, and to restrain execution in the suit at law, so that the defendant’s damages might be set off against whatever might be found due the com
The same doctrine seems to be approved by the chancellor in Hewitt v. Kuhl, 10 C. E. Gr. 24.
These authorities, we think, dispose of this ground of set-off.
It is suggested in the brief of counsel that the set-off should be allowed because of the insolvency of complainant, or under the rule that when once equity acquires jurisdiction of a subject, the jurisdiction will be retained for the purpose of doing complete justice between the parties. As to insolvency, it is enough to say that this fact is nowhere made an issue in the pleadings; and with regard to the other suggestion, that justice is completely done in the cause whenever all the rights of both parties in the matters propounded by the bill of complaint or equitably connected therewith are settled and secured. That the rule invoked does not require the court to pass upon a distinct claim of the defendant not so connected merely because the parties are the same; nor does the maxim that he who asks equity must do equity help the defendants; for it does not mean that a complainant must do equity to the defendant in all transactions which have ever taken place between them, but only with re.spect to those on which he seeks equity, and such as are equitably related thereto. It still leaves to be determined the question whether there is, in the view of a court of equity, any bond between the grounds of complaint and the- grounds of defence.
The vice-chancellor, therefore, was right in refusing.to entertain defendants’ claim for damages on breach of covenant.
Since the decree below, the aspect of .the general question has been changed by the rule of the supreme court extending the .statutory recoupment to contracts under seal, but that, of course, •does not affect the merits of the present decree.
The decree below awards costs to complainant. As he succeeds on a substantial portion of his bill, that praying an account, .and that the balance on accounting be paid to him, and as de
Defendants are entitled to the costs of the appeals.
Let the decree below be reversed, and a decree be entered in. accordance with the foregoing views.
Decree unanimously reversed.
