Everett v. Emmons Coal Mining Co.

289 F. 686, 1923 U.S. App. LEXIS 2036

• Court: Court of Appeals for the Sixth Circuit
• Decided: May 8, 1923
• Docket: No. 3755
• Status: Published

Opinion

DENISON, Circuit Judge

(after stating the facts as above). The first controversy between the parties at the trial was as to whether acceptance 1713 was binding upon the vendee in all its terms, and thus became, with order 5562, the contract between the parties, or whether the contract was composed of the telegrams and order 5562. The Court left this to the jury, and since the excusatory clauses upon which the vendor relied as reasons for nondelivery were contained solely in acceptance 1713, and since the jury gave a verdict for practically the full amount claimed by the vendee, the verdict really may have been based upon the theory that acceptance 1713 was not a part of the contract, instead of upon the theory that the vendor had not successfully justified under these clauses. There were no express exceptions to the charge of the court in this respect, but there had been objection and exception when the telegrams were received in evidence, and this was another phase of the same question. Ordinarily it might-not be error to receive at the opening of the trial the first communications between the parties which resulted in the contract, because it would be too early to pass upon the determining question; but here the pleadings had admitted the receipt of this acceptance by the vendee and its receipt of subsequent shipments. Further, this question was treated during the trial by the parties and the court as a vital question, and we think the alleged error on the subject should be taken as sufficiently saved by the exception with regard to the telegrams.

The undisputed facts make it clear to us that the only contract between the parties was constituted by order 5562 and acceptance 1713. The two telegrams did not make any contract. The one of acceptance, according to its conceded intent, changed the time of the proposed delivery. Some essential details were not specified at all. Since these telegrams amounted but to negotiations and not to a contract, vendee’s order 5562 only stated the existing legal rule when it said:

“This order supersedes all previous verbal or written communications and contains the final agreement. If not in accordance with, understanding, kindly return at once.”

The telegrams being thus superseded, there never was any written acceptance of order 5562, unless it was by acceptance 1713. This not only stated that the order was entered “subject to the conditions printed on the back hereof,” but further expressly said:

“If the conditions upon which we accept your order, as shown on the back hereof, are not satisfactory, please advise us at once, and we will cancel order; otherwise shipment will be made subject to these conditions.”

The vendee admits receiving this acceptance, and it continuously thereafter demanded and received shipments under the contract. In all the correspondence involving reliance upon two or three of these ex-cusatory conditions, the vendee never expressly denied that they constituted part of the written contract, although it did protest against their application, as being demands unjustified by the facts. Further, it is to be noticed that, when the vendee later gave a bond to secure the performance of the contract by it, it identified the contract between the parties as having been made April 3d. To the suggestion that there must have been a contract before April 3d because there was a shipment on April 1st, it is to .be replied that on April 1st there was another contract between the same parties in the course of execution by shipment, and that the accountant’s statement shows allocation of the April 1st shipment to this earlier contract. We conclude that the vendor was entitled to have the case tried as upon the contract made by the order and acceptance of April 3d, and that there was error in this respect. There must be a new trial; but the questions which have been argued, and which will probably arise again, should be considered.

The vendor’s justification for not shipping during May is that an increase in the price of coal at the mines had required an increase of 40 cents per ton in the contract price under condition No. 5 of the acceptance, and that until May 19th the vendee refused to concede this advance. This condition being a part of the contract, and the proofs on the trial being apparently undisputed that the advance at the mine had occurred, the vendor’s reasons up to this time seem to be sufficient; and the trial court was of that opinion. On the 19th the vendee conceded the point, and seemingly it would then be the vendor’s duty to make shipments during the remainder of the month. He escapes this conclusion by saying that the vendee was in default on and after May 15th in paying fully for the April shipments. The matter was sent to an auditor to state the account between the parties. He reported a composite account showing the dealings under this order and one earlier and two simultaneous ones, saying that it was impossible to apportion the payments. Accepting this conclusion, it would seem that a composite default under all the orders and' in a substantial amount existed during the remainder of May and justified nonshipment; and this was the opinion of the trial judge.

To justify nonshipments in June, the vendor says that about June 1st he came to have reason to .believe that the vendee’s credit was impaired, and he therefore proposed to cancel the contract under condition No. 1, unless the vendee would give him satisfactory security, and that the vendee delayed doing this until June 23d. He also urges that default in payment continued during this period. Whether this latter contention is good to any substantial amount, depends upon the disposition made of cars which had been charged against the account of the vendee by the vendor but which were confiscated or diverted and never reached the vendee. The debit balance carried on vendor’s books from June 1st to June 23d, which was in fact on account of such cars, was relatively so small, and was so far subject to good-faith dispute, that we think it an unsatisfactory and insufficient basis for a refusal to ship during that period. As to dissatisfaction with the vendee’s credit the criterion would be whether the vendor did have substantial reason to believe it was impaired, and made the claim in good faith. That will be a question for the jury upon the trial to he had, if there is conflicting evidence. Upon the proofs in this record, showing the extent and character of the information which came to the vendor, there seems scant, if any, reason to doubt his good faith. The fact that the vendee carried continuously large bank balances was not inconsistent, not only because it was not brought to vendor’s knowledge, but in view of the vendee’s very large business the balances may have been insufficient to go around.

For the remainder of the month of June, it is said that a railroad embargo prevented shipment. If true, this is good reason, under condition No. 2 of the acceptance. The subjects of this embargo and its effect, and of the burden of getting the necessary permits which would allow shipments even before the embargo, and of where, under this contract, the duty lay as to providing cars for shipment, and as to how much coal should have been shipped in this month after the 23d if the embargo defense failed, may well be left to the new trial. The record then may be more complete than it is now.

The vendor contends that, even if its demand for security was- unjustified, yet it became the vendee’s duty to give the bond, under the rule which requires a vendee to mitigate damages and by analogy to the cases holding that where the vendor refuses to allow the contract term of credit, but requires payment in cash, and the only damage caused to the vendee is the interest during the credit period, it is his duty to pay cash (Warren v. Stoddart, 105 U. S. 224, 26 L. Ed. 1117; Lawrence v. Porter [C. C. A. 6], 63 Fed. 62, 11 C. C. A. 27, 26 L. R. A. 167), and this question may arise again. This rule of mitigation is not applicable to the facts of this case. The demand for a bond not only involved possible, far greater injurious consequences to the vendee than a mere insistence upon cash payments would carry, but the demand was made as if of right, and an unconditional compliance with it would have been a waiver of any claim for the damages or costs caused by the compliance. Hence the duty to mitigate in this manner did not arise. Campfield v. Sauer (C. C. A. 6) 189 Fed. 576, 111 C. C. A. 14, 38 L. R. A. (N. S.) 837. A conditional compliance, reserving the claim for its cost, would have been subject to rejection by the vendor.

Nor was the vendor’s breach of duty to ship during the first 23 days of June—to the extent that there was such a duty, if at all—because of an unjustified bond requirement, necessarily waived or abandoned by furnishing a bond on the last-named date. Conceding for the pur-' poses of the opinion that such a waiver would result, in the ordinary case of compliance with an unjustified demand, and that the cost of the compliance would become the measure of damages, the concession would not reach this case. The remaining 7 days of the month might have been wholly insufficient to allow full performance. In this case, as it turned out, the delay prevented any further performance. At the most there could be drawn from the giving of the bond no intent to waive damages on account of such deliveries as it could not be reasonably anticipated would be made during the remaining opportunity. The facts on this subject are not sufficiently brought out upon this record for a satisfactory decision, and the question will not arise upon the new trial unless the demand for a bond should be found unjustified.

In the court below, it was finally thought that, in so far as the nonsfiipments in June might be justified, the duty was carried over until July,' at which time the measure of damages for nonperformance was at least as great as that appearing for June. Of course, such carrying over from June until July would occur if agreed upon (Consolidation Co. v. Portland Co. [C. C. A. 6] 272 Fed. 625, 628), no matter whether the agreement was express, or was implied from all the circumstances, including any interpretation put upon the contract by the parties. Whether there was any evidence indicating such agreement, we cannot say. Early in June the vendor indicated an intention to ship the May quota; in the bond of June 23d the vendee conceded that only the June and July shipments “remained to be furnished.” Some correspondence in the last days of June as to making shipments elsewhere than to Norfolk may refer to the June shipments or to the July shipments to be made. Upon the new trial this can be determined, if it is then in doubt. We think no such duty arose by law from the contract itself. Contracts contemplating period deliveries are held to be successive and separable contracts, defaults in which give rise to separate causes of action, rather than to surplus or deficiency carrying over into the next period, or are held to he unitary, in each case according to the properly deduced intent of the parties. Contracts for coal with monthly deliveries are peculiarly susceptible to the former construction. Indeed, it has been said of them:

“Time is therefore of material importance in this class of contracts, both as to sales, delivery, and payments.” Hull Co. v. Empire Co. (C. C. A. 4) 113 Fed. 256, 260, 51 C. C. A. 213, 217.

And also:

“Indeed, such contracts * * * concerning a subject-matter, like coal, to be mined from the earth and delivered immediately into cars for ’ consignment, are regarded, though in one writing, as a set of contracts.” Big Muddy Co. v. St. Louis Co., 176 Mo. App. 407, 158 S. W. 420.

Regardless of how far this distribution into periods must necessarily be made in contracts of this class as a general rule, we think there is no escape from'it in this case, if We consider only the face of the papers. This contract was not for 20,000 tons to be shipped in monthly instalments; it was for “5,000 tons per month for April, May, June, and July.” ² It is thus distinguished from contracts which call for a gross total, and so far as we observe from every contract which has been held to be unitary. We think the natural inference of intent to make four separable contracts is supported if not required by the provisions of condition 2 for prorating shipments, which could be carried out with difficulty, if at all, if delinquent shipments were to accumulate against another period; by the provisions of condition 3, which provide that if the vendee does not take the full amount during any period the vendor may cut down the contract proportionately for any other equal period; and by uniting all shipments for one month in one maturity and payment. Looking beyond the language of the contract into the circumstances, we observe that both parties doubtless understood that the problems of mining production and car supply called for placing a definite and not a fluctuating duty upon the vendor; that the vendee might be presumed to have ships under charter which could not endure delay; that large accumulation in storage at the dock to compensate for irregular shipments would be impracticable; and that to fix definite obligations upon such large quantities in a notoriously fluctuating market and extending, if more than four months, then for a wholly indefinite period into the future, would be somewhat improbable. Nor is the case analogous to those where the delivery is only part of the contract obligation, and where an impossibility of delivery may therefore only postpone that part of the performance, leaving the other obligations unimpaired. Here the vendor’s whole duty began' and ended with delivery and. was measured thereby. There was no pervading general duty which could carry the delivery duty as a postponed incident. Further, the contrasts found in condition 2 are significant. The deliveries by vendor are subject to causes beyond his control; but if there is unavoidable stoppage of the vendee’s requirements, the deliveries are to he suspended during such stoppage. From all these considerations it follows that, unless there was an express or implied agreement to the contrary, any default existing at the end of June was fixed, the cause of action therefor had arisen, and the measure of' damages was’ to be determined as of a June date.

The judgment is reversed, and the case remanded for further trial.

2 We cannot take the statement in the acceptance “20,000 tons available” to mean more than that the vendor would have that total available to meet the contract demands arising pursuant to the contract—not that he would keep it available somewhat indefinitely. We seé in it no tendency to •defeat the separable construction.