Anaheim Sugar Co. v. T. W. Jenkins & Co.

274 F. 504, 1921 U.S. App. LEXIS 1361

Opinion

ROSS, Circuit Judge

(after stating the facts as above). In sustaining the validity of the contract sued on, this court said when the case was last here:

“'‘The difference between a contract which does not obligate a buyer to take any specified quantity of the seller’s product-and one where in consideration of the seller’s promise to sell the buyer promises to buy all the produce it may require for its own use for a definite period of time is substantial. In the one instance there would be no consideration, while in the other there would be a mutual obligation to perform, which is a consideration for the promise of each. A mere option to buy is readily distinguishable from an agreement to buy all to be required. Suppose, for instance, the plaintiff herein had bought sugar from any other sugar dealer for sale to its customers during August, it must be that, if loss had occurred, action in damages for breach of contract would have been sustainable, and damages could have been ascertained by extrinsic evidence. Failure in the contract to fix any requirements on the part of the Jenkins Company for August, Í914, does not seem to us to call for a nullification of the contract upon the ground of want of mutuality. The complaint charges that the contract was made with the knowledge on the part of the defendant of how plaintiff’s business was conducted, and that plaintiff made contracts with customers for sale and delivery of sugar to be acquired under the contract with defendant, and knowing what the probable requirements of plaintiff would be. We think that upon demurrer the presumption is that the parties made their agreement with regard to the knowledge as alleged, and that the defendant intended to sell and deliver the quantity of sugar which the plaintiff needed for its August business.”

And, furthermore, that—

""By the terms of the contract temptation to cut down requirements because of falling market was reduced, in that it was expressly agreed that the Anaheim Sugar Company, manufacturer, guaranteed the price up to time of refusal against decline only to the base ofrpriee charged by tho manufacturer to certain buyers.” 247 Fed. 958, 960, 961, 160 C. C. A. 658, 661, 662 (L R. A. 1918E, 293).

[1] There was testimony tending to show that the defendant in error was a large dealer in sugar — the record showing that its sales during the month of August, 1911, amounted to $25,868.66, as compared with $35,527.19 for August, 1914, during the latter half of which latter month such sales were, according to the record, largely stimulated by war conditions. And that the defendant in error was in truth a large dealer in the commodity in question, whose custom was therefore desirable, further dearly appears from the testimony of the agent of the plaintiff in error, who entered into the contract in question on its behalf — the witness Ariss — who expressly admitted his knowledge of that fact, for which obvious reason he was, according to ids own testimony, anxious to obtain a contract obligating the defendant in error to buy from the plaintiff in error exclusively. Admittedly, just what the requirements of the defendant in error would be neither party to the contract knew. Regarding the August, 1914, requirements, we excerpt a few lines from the testimony of Ariss:

“Q. Now, the expression ‘August requirement’ and ‘August shipment,’ as used in this contract and used in the trade generally at that time, you understood that to mean orders taken for delivery in August, either within the month of August or two or three days before that time? A. Yes, anything for delivery iu August.

“Q. Do you recall, Mr. Ariss, that the instant they started to give you orders for shipments under this contract, just about the 1st of August, do you remember their telling you that they were rea dy to start shipments and would want the sugar almost at once? A. Yes; I recall that they ordered out 600 to 800 bags about the 1st of August, and before there had been a rise in the market. 1 do not remember what time in August tho heavy advance occurred in the price of sugar. It was along some time after the 10th, I think. I think they did before the 10th of August specify the delivery of additional quantities. or ask for tho delivery of additional quantities. I believe the amount of sugar actually delivered to them by the Anaheim Sugar Company for August was 600 bags.”

There is no ground for holding the evidence insufficient to sustain the verdict.

[2J The plaintiff in error assigns as error the instructions given by the trial court, as also its refusal to give certain requested instructions. In substance those given and complained of were, that this court had sustained the validity of the contract sued on (which, it obviously did, in the decision heretofore cited); that it was not necessary for the plaintiff to establish that the extent of its requirements for August, 1914, was susceptible of exact prophecy at the date of the contract, hut that it must show by a preponderance of the evidence that its business was an established and substantial one; that the sale of sugar was a clearly marked and indispensable feature of its business; that it had a reasonably established and dependable list of customers who looked to it regularly for all or part of their sugar supply, and that within reasonable limitations it was possible at the date of the contract for the parties to it by fair inquiry to approximate the quantity which would probably be needed by the plaintiff, and that in so doing account should be taken of the season of the year, the preceding history and scope of the plaintiff’s business, and its normal growth; that the world war and other unlooked-for influences should be excluded from such considera- ' tiqn, and; excluding those things, if a fair approximation of what was required could be arrived at by the parties the contract was enforceable; that the contract did not mean that the defendant was obliged to deliver to the plaintiff all that the latter might require in the sense of all that it might want or desire because of a. radical advance in market price or for any other cause not fairly within the contemplation of the parties when the contract was executed; that the word “requirements” meant the amount of sugar which plaintiff would ordinarily and in the regular conduct of its business need to supply the ordinary demands of an established trade in the month of August, 1914, making due allowance for the season (unless the same was abnormal), making allowance also for a healthy normal growth (if the jury believed the business was a healthy and growing one), and which they believed was contemplated by the parties at the time of the execution of the contract ; that it was incumbent upon the plaintiff to prove by a preponderance of the evidence that when the contract was entered into both parties to it had knowledge of what the plaintiff’s probable normal re-vquirements for fine granulated best sugar would be in the- month of August, 1914, and that the contract was entered into in contemplation of that knowledge, in the absence of which knowledge on the part of both parties to the contract the verdict should be for the defendant; that the knowledge so required by both parties to the contract must have been based upon a then existing knowledge of both parties as to previous requirements of the plaintiff for sugar “for corresponding period of time prior thereto with a fair allowance for a normal increase in the volume of the plaintiff’s business in said commodity over the volume of business therein for such previous corresponding periods, or to have been based upon a knowledge communicated at or prior to the time of the making of said contract to the defendant by the plaintiff of the plaintiff’s probable normal August, 1914, requirements of such sugar, and that the information so communicated to the defendant must have been based upon the plaintiff’s previous requirements of the same commodity for corresponding periods prior thereto, with a fair allowance for a normal increase, in the volume of the plaintiff’s business in said commodity over the volume thereof for such previous corresponding periods”; that mere guesses or expectations of the quantities of plaintiff’s probable normal August, 1914, requirements, if not based upon and derived from knowledge of previous actual requirements by the plaintiff for corresponding periods prior thereto, and upon a fair allowance for a normal increase in the volume of plaintiff’s business in said commodity over the volumes for such previous corresponding periods would not be sufficient to render the alleged contract involved definite, certain, and. binding; that the probable normal requirements of the plaintiff did not mean its possible requirements, nor could the August requirements be measured exactly by August requirements of previous years, and that in determining what the August requirements were, the jury should take into consideration anything in the record tending to show what the normal conditions for August were, which the parties contemplated at the time of entering into the contract; that if the plaintiff’s requirements were increased by the advance in price, and that if such advance in price was unusual and abnormal, the defendant was not obliged to supply any quantity of sugar ordered by the plaintiff because of such stimulated demand; that the law does not permit a contract to be used for speculation or for any other than ordinary and regular business purposes, and that if the plaintiff attempted to use the contract for the purpose of speculation in a rising market, such attempt would be a fraud upon the defendant and the defendant would be entitled to refuse to be bound further by the contract; that it was the duty of both parties to it to deal fairly and in good faith with each other.

In our opinion the plaintiff in error has no just cause to complain of the instructions so given.

[3, 4] The clause in the instructions of the court also assigned as error, reading, “The question of whether or not the plaintiff is to recover is with you and not with me,” is to be read in connection with the clause immediately preceding it, reading, “The fact that I instruct you concerning damages shall not be taken by you as any intimation that I am of the opinion that the plaintiff is entitled to recover damages,” and as so read it is manifest that the assignment of error is not well taken. The latter observation is equally applicable to the assignment that the court erred in telling the jury in effect that this court had held the contract sued on valid.

In so far as the requested instructions were pertinent and proper, we think they were covered by the instructions given,

. The judgment is affirmed.

Footnotes

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