Hazleton Tripod-Boiler Co. v. Citizens' St. Ry. Co.

72 F. 317, 1896 U.S. App. LEXIS 2563

• Court: U.S. Circuit Court for the District of Western Tennessee
• Decided: January 17, 1896
• Status: Published

Opinion

HAMMOND, J.

(after stating the facts as above). The investigation before the master to ascertain the “cost” of the boilers, as shown by his report and the exceptions to it, convinces me that the right of the parties must be governed solely by the written contract. That was my impression at the hearing, but because Holmes admitted that he was to furnish the boilers at cost, without profit, and the defense was that, by fraud, he had procured a written contract for more, it seemed desirable, before final determination, to definitely ascertain precisely what the cost had been, which the proof did not then disclose. It seems, from the master’s report, that it is quite impossible to fix this satisfactorily; and this in the very nature of the things unless we give a meaning to the word “cost” that is more restricted than the plaintiff is willing to concede was meant in the negotiations for the sale. We are all familiar with the seemingly insuperable difficulty of ascertaining the cost, for example, of producing a pound of cotton or of making a yard of cloth; and perhaps no two persons engaged on the problem would agree on the prime elements of the calculation, as none of the parties, witnesses, or the master can agree on them in this case. Even in the simpler application to mere bargain and sale of a thing already in existence, and not to be manufactured, the term is ambiguous, and so much so that it is not impossible that often it will be found to avoid the contract for incurable uncertainty, though I have not found it necessary to go into that subject. Specific performance of such a contract was refused, because it would be to make a contract for the parties and then execute it, where it had been agreed that arbitrators should fix the cost, and they had failed by disagreement about it; and in another case where it was so agreed, and one of the parties died, a court of equity would not specifically perform it, because of the incompleteness and uncertainty, such a case not being analogous to a recovery of the price of goods upon a quantum valebat. Frye, Spec. Perf. 165. In searching for the legislative meaning of the word “cost” in a customs act, Mr. Justice Washington said, “The term is certainly of an equivocal meaning”; and in argument illustrates by saying:

“The actual cost of a bale of goods purchased at Liverpool is composed of tbe price paid for it, or, in other words, the prime cost and charges, including commissions on the purchase, the packages, if any; and, if the goods were purchased at the manufactory, then it includes, not only the prime cost and all charges attending them to the place of exportation, but also the charges before mentioned, and perhaps many others.” Goodwin v. U. S., 2 Wash. C. C. 493, Fed. Gas. No. 5,554.

He laments that' a court is called on to interpret “expressions of such doubtful import, without a clue to ascertain, with precision what was the real intention.”

It would be interesting to search the cases which have, under varying circumstances, defined the term; but none has been produced, and I have found none, which limits the meaning as the defendant does, nor expands it as the plaintiff does. Indeed, they ,seem quite short of any direct bearing on the word as used by these parties, respectively. It would be comparatively easy to measure or weigh the materials used in these boilers, count the price or value of it, keep account of the hours of labor, and its value or price, and find these two primary factors of the problem, and also quite easy to avoid all the rest by counting these and ordinary freight and charges as the only cost; but that is hardly fair to the plaintiff, and so far from merely cutting away its “profit,” which was agreed to be surrendered, would probably entail a loss. Yet the master concedes the cost, ascertained as he does it, is not wholly fair to the defendant; and one might easily suggest other elements of calculation largely increasing the cost, which, for a problem in economics, might be counted. Hence it was eminently desirable that these parties should beforehand do just what the plaintiff contends they did, — settle exactly what this “cost” was to be. If the defendant company, eminent as it is known to be for its high- business character and enterprise, did not revise Holmes’ offer before signing it, and see that the sum demanded was not too large, I cannot see that it can call on a court of equity to make such a revision now, after they have had the boilers in use, and the only possible question is what shall be paid for them. It would take the strongest proof of fraud or mistake to induce a court to set aside a written contract signed by the parties, distinguished business men as they were, upon the charge of imposition and overreaching such as is made in this case. And there is no such proof here; Billings and Holmes, upon whose testimony, respectively, the case depends, quite evenly balancing each other in the scales with which we judicially weigh the evidence. Even on the theory of the defendant, that it has only to pay the “cost” of the boilers, Holmes’ testimony that, before he prepared the contract for signature, he and Griffin calculated the cost to the plaintiff company at $17,200, finds corroboration in the finding of the master in one calculation he makes of the cost at $16,792.74. It is urged against this that Holmes and Griffin now calculate the cost to be something over $20,000, and demand that sum, if the case is to be settled on the basis of the cost, and not the contract. But this is only a thing of calculation, and in such an inquiry it is open to them, if we break away from the writing, to make the final sum as large as possible on any theory of cost they may adopt, or find a sensible pretext for suggesting to us. They testify that in one of their calculations they came to a few hundred dollars over $17,000, and, because a rival manufacturer offered the defendant a bid for $17,000, they put that offer in the written contract, which explains the restraint they felt in figuring the cost at as low a sum as anyone else would do the work. But the plain answer to all this is that business men, like those composing this defendant company and acting for it, should have known what they were doing when they signed the paper; and, with such men dealing with him, it would require very formidable proof to set the contract aside for any overreaching of them by Holmes. They should not be allowed to save their own negligence in not looking closely after this contract by any charges of fraud against Holmes not apparent without much reliance on a too loose weighing of seemingly inconsequential circumstances like those of Mr. Billings’ age, his trustfulness of Holmes, and friendly desire to help him. In Richardson v. Hardwick, 106 U. S. 252, 1 Sup. Ct. 213, the parties had a written contract, and the plaintiff, in his bill, alleged that one of the “unexpressed” terms was to a certain effect. The court said it was a matter of dispute between the parties, — one affirmed, the other denied, — and the burden of proof was on the plaintiff to establish it, as here it is on the defendant company, or Billings, which is the same thing in effect. But the court ruled that, all previous negotiations and understandings having resulted in the contract, it alone should govern; and although the proof was in favor of the defendant, as against the burden of the plaintiff, it was rejected as wholly inadmissible to vary the writing. When parties have deliberately put their engagements into writing, in such terms as import a legal obligation, without any uncertainty as to the object or extent of such engagement, it is conclusively presumed that the whole engagement of the parties, and the extent and manner of their undertaking, was reduced to writing; and all oral testimony of a previous colloquium between the parties as would tend in many instances to substitute a new and different contract for the one which was really agreed upon, to the prejudice, possibly, of one of the parties, is rejected. De Witt v. Berry, 134 U. S. 306, 315, 10 Sup. Ct. 536. In another case, where the burden was on the plaintiff, and his own testimony on which the issue rested was “inconclusive,” the court put the decision on the rule that in the absence of fraud, accident, or mistake, this rule of evidence is the same in equity as at law. Forsythe v. Kimball, 91 U. S. 291. Until the contract is reformed on some of these grounds by a court of equity, all previous verbal engagements are merged in the written agreement, for the very purpose of avoiding any controversy or question respecting them. Insurance Co. v. Mowry, 96 U. S. 544, 547. And so are all the cases. Van Ness v. Washington, 4 Pet. 234, 284; Potomac Steamboat Co. v. Upper Potomac Steamboat Co., 109 U. S. 672, 3 Sup. Ct. 445, and 4 Sup. Ct. 15; Culver v. Wilkinson, 145 U. S. 205, 12 Sup. Ct. 832; Seitz v. Machine Co., 141 U. S. 510, 12 Sup. Ct. 46; Johnson v. Railroad Co., 141 U. S. 602, 12 Sup. Ct. 124; Bailey v. Railroad Co., 17 Wall. 96; Oelricks v. Ford, 23 How. 49. Here the defendant company would avoid this rule by charging Holmes with fraudulently procuring the writing in the terms in which it is couched, but substantially the proof of it rests wholly upon Billings’ testimony, and it is mainly a struggle between these two as to their recollection of the preceding occurrences. This does not answer that burden wbicb tbe above antborities put on bim wbo alleges' fraud as against tbe writing signed by parties wbo are not affected by any infirmity, or feebleness of capacity to take care of themselves in a transaction like this. Holmes really concedes quite all that Billings claims as to tbeir understanding about tbe contract for boilers wbicb were to be furnished at cost without profit, and the substantial controversy is whether tbe $17,000 written in tbe contract is more than that cost, and tbe struggle over this relapses into contentions as to what is tbe proper basis for tbe calculation. Tbe master reports that it is quite impossible to calculate it with satisfactory precision, and no doubt that is true; but tbe general fact remains that, on a fairly reasonable theory, it may be figured out to tbe sum wbicb was charged and written in the contract, and there is no sort of pretense that Holmes and Billings bad any agreement as to tbe theory or method of ascertaining tbe cost, and tbe fact that another bidder figured out tbe same price for his boilers, — of a different construction, however, — leaves it reasonably sure that tbe value of tbe thing wanted was in that neighborhood.

Holmes, perhaps, is justly subject to some criticism as a witness; but, after all, taking into consideration tbe adverse criticism of Billings’ evidence, I think it is not proved that Holmes committed any fraud on tbe defendant company, in procuring its signature to this contract. Tbe basic fact for tbe charge is that Holmes wrote into tbe contract a sum very much larger than tbe cost of tbe boilers, and this is not proved at all, unless we strip tbe calculation to its least possible factors, and adopt a theory of lowest possible cost, — tbe bare price of material and labor, almost But this is only a construction put by tbe defendant company on tbe word “cost,” and there is no proof of a specific agreement that Holmes should work tbe. cost down to a minimum like that, in Billings’ interest. Billings, for reasons given in tbe proof, arising out of tbeir anterior business and personal relations, seems to think Holmes an ingrate, if be did not do this, and possibly, for similar reasons, believed that Holmes would do it, and also that be should have come to bim, and gone over tbe figures with bim, before writing up tbe contract; but, Holmes not having unequivocally agreed to do so, it was not a fraud on Billings to disappoint bis expectations, wbicb are no doubt much more vivid now, after tbe fact, than pending tbe negotiations, during wbicb be was really neglectful about having some more precise, understanding than bis own unexpressed conception of tbe meaning of tbe word “cost.” In this state of tbe proof, I conclude to reject tbe testimony, for all purposes, except as it tends to prove tbe fraud alleged; and, being inconclusive as to that, it is useless as against tbe contract. Tbe exceptions to tbe master’s report will be overruled, and it will be confirmed, with tbe allowance claimed by him for making it. The plaintiff to have a decree on tbe basis of tbe sum stipulated in tbe written contract, with interest, subject to such credits as tbe defendant may> be entitled to, if any, with a reference to tbe master to fix this amount, if tbe parties disagree about it. Defendant to pay the costs.