Arrow Petroleum Co. v. Johnston

162 F.2d 269, 1947 U.S. App. LEXIS 2126
CourtCourt of Appeals for the Seventh Circuit
DecidedJune 2, 1947
DocketNo. 9173
StatusPublished
Cited by11 cases

This text of 162 F.2d 269 (Arrow Petroleum Co. v. Johnston) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arrow Petroleum Co. v. Johnston, 162 F.2d 269, 1947 U.S. App. LEXIS 2126 (7th Cir. 1947).

Opinion

SPARKS, Circuit Judge.

Plaintiff, referred to here as “Arrow,” sued the defendant, Johnston, on November 13, 1943, to recover damages for an alleged breach of contract. By this written contract, entered into by the parties on September 6, 1941, Arrow agreed to purchase from Johnston approximately 187,000 barrels of No. 6 fuel oil. Each, barrel was to contain 42 gallons, and the price to be paid by Arrow was 85 cents a barrel, plus 1.19 cents a gallon for transportation by barge from Vicksburg, Mississippi, to Lockport, Illinois. There had been an earlier contract between the same parties dated May 14, 1941, for 225,000 barrels of oil, under which 37,935.96 barrels were received. Johnston had repudiated this earlier contract, and the contract of September 6, was for the undelivered portion of the earlier contract. By March 6, 1942, Johnston, in compliance with the later contract, had delivered to Arrow 76,502.14 barrels of oil, for which Arrow had promptly paid him.

The controversy here involves the matter of demurrage. As to this issue the later contract contains the following provisions:

“4. Transportation charges * * *. Responsibility for picking up loaded barges at Lockport, is to be upon Arrow * * *, and as to any time lost awaiting pick-up of loaded barges — same is to be added to unloading time allowed, which is six hours hook-up plus 1,000 barrels per hour.1 E. C. Johnston agrees to supply the necessary barges, tow-boats, etc., to transport said oil from ■ Vicksburg, Miss., to Chicago (Lockport, Illinois), without cost, other than as herein specified.

“5. It is understood that Arrow * * * shall not be responsible for delays in unloading caused by faulty equipment. De-murrage shall be charged at the rate of $2.00 per hour for the first forty-[271]*271eight hours, and $4.00 per hour thereaft- * * *

******

“8. Tug demurrage hereunder for delay is to be based upon Horse Power of tow boats, to be figured on the following basis: At the rate of $12.50 per hour on tow boats of 750 Ilorse Power, and more or less at same rate per Horse Power in proportion to the Horse Power of (ow boat involved.”

In the course of oil deliveries from Vicksburg to Chicago, delays occurred in unloading barges by Arrow. Because of these delays, Johnston billed Arrow for a total demurrage of $4,433.66. Of this amount, $386.33 was for deliveries made under the previous contract. The remainder was under the demurrage clauses of the contract of September 6. Arrow did not pay the demurrage thus claimed and billed by Johnston, because the former asserted that the delays in unloading had been caused by faulty barges furnished by Johnston, and for the further reason that the six hour hook-up time allowed by the contract was to be granted to each barge in a tow, rather than for the tow as a whole, as asserted and claimed by Johnston.

On April 2, 1942, Johnston wired Arrow that he considered their agreement of no further force and effect because it had breached their contract by not paying de-murrage as invoiced and requested by him. In response thereto Arrow wired Johnston:

“We have never refused to pay demur-rage caused by our inability to unload as covered in contract. We have covered in writing each delay caused by faulty equipment, and have awaited credits covering such cases. We are willing to pay adjusted charges in conformance with contract. Imperative that we receive shipments to meet federal government obligations. If shipments do not come forward immediately it will necessitate our buying on outside, charging you the differential loss.”

On April 24, 1942, Johnston wired Arrow:

“When you refused to pay the accrued demurrage on barges, you breached your contract with me, and relieved me from further obligation to perform thereunder. You ended the contract, and its terms are no longer binding upon me. Demand is hereby made upon you for $4,433.66 demur-rage charges.”

Thereupon, Arrow, by this complaint, sued Johnston for the difference between the contract price and the market price in Chicago of the 110,561.90 barrels (4,643,-599.80 gallons), still undelivered by Johnston. Without admitting liability Johnston agrees with Arrow that this price differential is correct.

The defendant moved to dismiss the complaint, for lack of material facts, which was overruled. He moved for a pretrial conference. He then filed an answer in two paragraphs accompanied by a counterclaim. The first paragraph of answer alleges that the complaint fails to state a claim upon which relief can be granted. The second paragraph avers that Arrow failed to provide facilities by which oil could be discharged at its terminal at the rate of 750 barrels per hour; that Arrow ignored Johnston’s requests for payment of demur-rage prior to the latter’s declaration that he considered the contract no longer effectual; that the barges and tugs were unnecessarily detained by Arrow in excess of the unloading time allowed, thereby unnecessarily depriving Johnston of their use, thus impeding and obstructing him in his production and marketing of oil. He denied that any delays of Arrow in unloading, over free time, were caused by Johnston’s faulty equipment, or that Arrow advised him of that fact. He asserted that his failure to deliver oil was due to causes beyond his control, but did not specify such causes other than Arrow’s failure to provide unloading facilities which would discharge the oil at the rate of 750 gallons per hour. He alleged that he abandoned the contract because of Arrow’s refusal to pay demur-rage thereunder.

The counterclaim alleges that Johnston was induced to enter into the contract of September 6, 1941, by Arrow’s promise to improve its unloading facilities, so that it could discharge the oil at 750 barrels an hour. On information and belief, it was alleged that Arrow did not thus improve its unloading facilities. By reason of these [272]*272facts, Johnston claims damage by way of demurrage to the extent of $4,433.66, and for the further sum of $25,000 because Arrow’s failure to unload the oil within the time allowed deprived Johnston of the use of the barges, thus preventing him from operating his refinery at maximum capacity and from transacting such business to the fullest extent.

On December 15, 1944, this cause was set for pretrial conference, and at that conference Arrow, on December 21, 1944, was ordered to reply to the answer and counterclaim, and in the alternative to move to strike portions of those pleadings, and both parties were ordered to support by briefs their contentions with respect to Arrow’s alternative motion to strike.

On January 10, 1945, Arrow filed its replies to the answer and counterclaim, together with its alternative motions to strike all or portions of each of those pleadings, for the respective reasons that the allegations of the answer did not constitute a defense to the complaint, and that the allegations of the counterclaim did not constitute a cause of action, other than as to the alleged demurrage of $4,433.66. On January 16, 1945, defendant demanded a jury trial.

Subsequently, on February 17, 1945, prior to the court’s ruling on the motions to strike, Johnston filed an amendment to his answer by which he sought to read into the above quoted demurrage clauses an express oral undertaking of Arrow to unload 750 barrels an hour, and a promise of Arrow to install pumping equipment capable of pumping that much per hour.

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Cite This Page — Counsel Stack

Bluebook (online)
162 F.2d 269, 1947 U.S. App. LEXIS 2126, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arrow-petroleum-co-v-johnston-ca7-1947.