Kehlor Flour Mills Co. v. Linden

Rugg, C. J. This is an action to recover damages for breach of an alleged contract. At the time of the transactions here in issue, the plaintiff was a corporation engaged in the manufacture and sale of flour at St. Louis in the State of Missouri. The plaintiff employed as its agents respecting trade in Sweden and Norway, Noremberg and Belsheim of Christiania in Norway, who hereafter for convenience will be referred to as the agents. The defendants were purchasers of flour in Gothenberg in Sweden. The important point to be decided is whether a contract was made between the parties for the sale by the plaintiff and the purchase by the defendants of a quantity of flour. The material negotiations on that subject were all by letter, telegraph or cable. Being thus in writing and no ambiguous words or terms being employed, and the circumstances not being in controversy, the question whether a contract was made is one of law and not of fact. Ellis v. Block, 187 Mass. 408, 411, 412. Goldstein v. D’Arcy, 201 Mass. 312, 317. The writings taken — 123 — together must be so plain in their meaning and effect as not to be open to reasonable misunderstanding, in order that there be a contract. If they are thus plain, it is of no avail for either party to say that they were not understood. Wheaton Building & Lumber Co. v. Boston, 204 Mass. 218, 224-226. The transactions consisted of offers'made by the defendants to purchase flour of the plaintiff and replies made by the plaintiff or its agents to these offers. An offer made by one party must be accepted without qualification, or, if any variation from that offer is made by the accepting party, that variation in turn must be unequivocally adopted by the party making the first offer, before a contract can be made. Ordinarily the annexing of a condition to the acceptance of an offer is regarded as the rejection of the original offer and the making of a new counter offer. Such counter offer must be accepted without departure from its terms or there is no contract. Putnam v. Grace, 161 Mass. 237, 245. Harlow v. Curtis, 121 Mass. 320. Minneapolis & St. Louis Railway v. Columbus Rolling Mill, 119 U. S. 149. The written intercourse here in issue took place within a few weeks after the outbreak of the great war. In general, the court will take judicial notice of the disturbance of commercial relations thereby caused between neutral .countries dependent upon navigation in the zone affected by that war. Underhill v. Hernandez, 168 U. S. 250, 253. The first communication was a telegram of September 10, 1914, from the defendants to the agents, in these words: “Offer firm against reply here within Saturday September twelfth further forty thousand sacks Rex patent same price and terms. Shipment on call September October confirm by wire soonest possible.” The words “same price and terms” refer confessedly to a contract in writing between the parties made a few days earlier, not otherwise here material except for the purpose of fixing price and terms. It is conceded that these elements, fixed thus by reference to the earlier contract, were a price of "Dollars 6.90 (six dollars and ninety cents) per 220 lbs.” and “Payment: Dollars 276,000 (dollars two hundred and seventy-six thousand) cash in American currency deposited immediately by cablegram by Messrs. Brown Bros. & Co., New York, who cable sellers and pay this amount to sellers against Through-Bills of Lading issued.” “Credit — 124 — opened [with Brown Bros. & Co.3 wont be annulled nor withdrawn:” or in other words that credit was “to be irrevocable, not to be withdrawn and not to be cancelled.” Shorter expression for this kind of credit appear to.have been “bank guarantee” and “confirmed credit.” Receipt of this order was acknowledged to the defendants by the agents who cabled it to the plaintiff. But the reply of the plaintiff through its agents was transmitted under date of September 13 and was received by the defendants on September 14. It was in these words: “We confirm sale additional forty thousand Rex hundred kilos cottons Linden Lindstrom six dollars and ninety cents free on board Boston cash New York. ... Arrange immediately confirmed credit two hundred and seventy-six thousand dollars Brown Bros. Company.” It is plain that if the communications had ended here there would be no contract. The time limit of the offer by the defendants to make the purchase expired on September 12 and the acceptance of that offer by the plaintiff, although unequivocal in terms, was not sent by the agents until September 13 and was not received by the defendants until September 14. This was two days after the offer of the defendants expired according to its express terms. But the communications between the parties did not end here. On September 14 the defendants wired the agents, — “Confirm we bought further 40 thousand sacks Rex per Canton and further two thousand Sovereign same price and terms as previously Sovereign shipment September Scandinavian tonnage subject to depositing equivalent amount ICronas with Skapdinaviska Kreditaktiebolaget until dollars available confirm by wire.” The Skandinaviska Kreditaktiebolaget was a bank in Gothenberg. Receipt of the telegram of the defendants of September 14 adding the new condition was .acknowledged by the agents by telegram in these words: “We confirm having wired ICehlor Flour Mills yesterday that for the further forty thousand Rex bought by you per steamer Canton end October from Boston at price and terms as former lot equivalent amount in Kronas will be deposited with Skandinaviska Kreditaktiebolaget until dollars available for same.” The same in substance was written on the same date by the agents to the defendants. On September 16 the agents sent a telegram to the defendants in these words: "Kehlors cable, ‘confirm Linden forty thousand rex steamer Canton Boston end October • six — 125 — ninety arrange irrevocable credit Brown Brothers have bought' wheat to fill contract and must commence shipping flour promptly.’ Order ICreditaktiebolaget instantly through Brown Brothers cable ICehlors deposit preliminarily made of equivalent amount kronas until dollars available which must be procured with the utmost despatch and also that the deposit will neither be withdrawn nor cancelled confirm by wire to us that so has been done.” The portion of this telegram enclosed in subquotation marks was in English, being the quotation of a cablegram from the plaintiff to the agents, sent in reply to their cablegram transmitting to it the telegram of the defendants of September 14, and the rest of the telegram was in the Swedish language. On the same day, September 16, the agents wrote to the defendants reciting their telegram of even date and adding, — “and we are awaiting your immediate wire confirmation that the equivalent for the last 40,000 sacks Rex for shipment per the S. S. Canton end October has been preliminarily deposited with the Skandinaviska ICreditaktiebolaget in Swedish currency until dollars .obtainable in. the course of a few days, in which respect all efforts are made from your side, and that the Skandinaviska ICreditaktiebolaget wire to ICehlors today hereabout through Brown Bros. & Co., New York, and that the deposit be neither withdrawn nor cancelled.” In order to determine the meaning of the telegram and letter, both under date of September 16, of the agents, including the copy of the plaintiff’s cablegram to them in reply to the defendants’ final offer, sent to the defendants, it is necessary to analyze the meaning of the defendants’ proposition to purchase. That proposition in its final form depénds upon three different writings: (1) the original contract to which reference is made for “price and terms,” (2) the telegram of the defendants of September 10, and (3) their telegram of September 14. The pertinent parts of these already have been quoted. There would be no doubt as to the meaning of the contract if it depended on the first two writings alone. It is the third which causes difficulty. That instrument contained a variation from the earlier offer. That telegram of September 14 was not a breaking off of previous negotiations, but a continuance of them. Its first three words,‘namely, “Confirm we bought,” incorporate all — 126 — that had gone before, (so far as not then to be modified) and is the language of an intent to express a completed transaction. But there is one new condition added, and the whole contract must be treated with that “subject” clause incorporated. In order to ascertain the complete offer of the defendants, their several communications must be put together. So far as concerns the crucial matter of payment, these terms were "Dollars 276,000 (dollars two hundred and seventy-six thousand) cash in American currency deposited immediately by cablegram by Messrs. Brown Bros. & Co., New York, who cable sellers and pay this amount to sellers against Through-Bills of Lading issued.” “ Credit opened wont be annulled nor withdrawn” (from the first contract and embodied by reference in the telegram of September 10 and in the telegram of September 14) “subject to depositing equivalent amount Kronas with Skandinaviska Kreditaktiebolaget until dollars available” (from the telegram of September 14.) The meaning of this last condition in connection with the words “same price and terms as previously” preceding in the telegram of September 14, and with what had before passed between the parties, is that irrevocable credit was to be established with the New York bankers of an amount sufficient so that the price could be paid to the plaintiff against through bills of lading issued, but that in place of this being done “immediately” as required in the earlier contract, an equivalent amount of kronas, that is, an amount of kronas sufficient to establish the credit in New York, was to be deposited immediately in the bank in Sweden until such reasonable time as exchange in dollars could be procured, but in any event within such time before shipment as would fully secure the plaintiff. By no fair construction of these writings can it be said that the condition established by the words following and including the word "subject” in the telegram of September 14 expunged that part of the previous correspondence which required the establishment of irrevocable credit with Brown Brothers and Company in New York in dollars to an amount sufficient to meet the payments as and when required. All these provisions of the original contract are imported into the final offer of the defendants by the use in the telegram of September 14 of the words “same price and terms as previously.” The words “and terms” in this connection would have no meaning, — 127 — if the entire statement of the provision as to payment was intended to be comprehended in the condition as to the deposit of kronas in the bank in Sweden until the defendants could purchase New York exchange in dollars. The contract price was not in kronas, but in dollars. The place of payment was not Sweden, but New York. The time of payment was when through bills of lading were issued on the steamer Canton expected to sail the last of October. The deposit was to be made immediately. These elements of the contract were not changed by the telegram of September 14. The form of expression used in the telegram of September 14 is incompatible with any other idea than that the main terms of the earlier contract and proposal are retained. The collocation of the words “same price and terms as previously . . subject to depositing equivalent amount Kronas . . . until dollars available,” denotes that the words following "subject” are subsidiary to the dominant provisions as to price and terms previously stated. Neither in form nor in substance do they indicate an elimination of the terms previously stated. The meaning cannot be attributed to them that the place, time and currency of payment are changed and all expense in respect thereto is shifted from the buyer to the seller. It cannot be thought that the defendants intended, or that the plaintiff could have understood that they intended, all these terms to be obliterated, as they would or might be, if the condition ás to the deposit of the equivalent amount of kronas in the Swedish bank be given a meaning inconsistent with the idea that irrevocable credit should be established with Brown Brothers and Company in New York in time to satisfy all requirements of the contract as to payment. It is further manifest that no such meaning was intended, because the condition was also that the deposit of kronas was to continue only “until dollars available,” or “obtainable” (as shown by another translation of that telegram), thus making clear that exchange was still to be at the expense of the defendants and that payment was to be made in dollars in New York. The offer as thus made by the defendants does not appear to us to be ambiguous or open to reasonable doubt. It is certain and explicit. This being the meaning of the defendants’ offer, the reply of the plaintiff to that offer must be interpreted in the light of that meaning. — 128 — Whether the plaintiff accepted this offer of the defendants according to its terms depends upon the meaning of the telegram and letter of the agents to the defendants dated September 16. That telegram and letter included a copy of the plaintiff’s cablegram in reply to the defendants’ offer of September 14 transmitted to it by their agents. That cablegram. was in terms a confirmation of the defendants’ offer for forty thousand sacks of flour to be shipped on the steamship Canton jailing from Boston at the end of October. The, reference to the irrevocable credit with Brown Brothers and Company was to one of thé terms of the defendants’ offer. It was not in any fair sense a counter offer or the suggestion of a new condition. Irrevocable credit with Brown Brothers and Company was one of the essential terms of the original proposition made by the defendants. That had not been modified or withdrawn by their telegram of September 14. The only qualification of the original contract as to terms of payment wrought by that telegram was to modify the word “immediately” in that part which required the immediate establishment of irrevocable credit with Brown brothers and Company by a provision to the effect that the immediate deposit might be made in kronas in the bank in Sweden in order to give the defendants more time, if they desired, in purchasing New York exchange, and thus seasonably establishing the irrevocable credit with Brown Brothers and Company. The reference to this irrevocable credit in that connection was simply to one term of the offer already made. It was nothing new or additional. This is made clear by the amplifying words used by the agents in transmitting to the defendants the cablegram of the plaintiff. They urged the defendants to direct the bank in Sweden to cable to Brown Brothers and Company that the preliminary deposit of kronas equivalent in amount to the dollars required to make the payment had been made, and to procure necessary exchange with despatch. The statement in the plaintiff’s cablegram that we “have bought wheat to fill contract and ' must commence shipping flour promptly” was a plain intimation that it had accepted the offer of the defendants. The acceptance of the defendants’ offer contained in the .telegram and letter of the agents to the defendants under date of September 16 was unequivocal. The mention of the irrevocable — 129 — credit with the New York bankers may be construed either as directing attention to one of the terms of the contract of particular importance to the plaintiff, or as an instruction to their agents to see that this term of the contract was carried out. But it is not susceptible of the construction that a new or different term was imported into the transaction. The offer of the defendants completed by their telegram of September 14 was accepted according to its terms by the telegram and letter sent to them by the agents on September 16. If there had been mistake or misunderstanding of the meaning or effect of a written contract plain in its terms, this circumstance alone would be no reason for not enforcing the contract. Both parties construed the contract as concluded. The plaintiff made purchases in order to supply the flour. The defendants made efforts as appears from their correspondence to procure American exchange. They engaged the necessary «space for transportation of the flour on the steamship Canton. There were several letters and some telephonic communications between the agents and the defendants subsequent to September 16. But they all relate to incidental or subsidiary matters and do not modify the rights, of the parties as fixed by the contract. Neither party in correspondence or otherwise, until after October 1, made any contention that the contract was not closed. No deposit of equivalent amount of kronas was made by the defendants with Skandinaviska ICreditaktieboIaget. There was considerable correspondence and telephonic communication between the agents and the defendants about purchasing exchange on New York in order that the defendants might make-deposit of the required sum there, but it came to naught because the defendants regarded the rate of exchange as too high. If this be treated as material, there was uncontradicted evidence to the •effect that average exchange in normal times was 3.77 kronas for one dollar, and that that figure was known as par in times of peace; that normal exchange in September, 1914, was disturbed by reason of the great war and that exchange could have been purchased at the rate of about 3.91 kronas for each dollar in New York between' September 15 and October 6. The contract required, accbrding to the interpretation here given to. it, that the defendants should immediately deposit — 130 — kronas in the bank in Sweden to an amount equivalent to the irrevocable credit required with the New York bankers. That was not done. No irrevocable credit as set forth in the contract was established with these bankers at any time. There was a breach of the contract by the defendants in not pursuing one or the other of these two courses immediately. Under date of October 7 the plaintiff sent its first direct communication to the defendants by cablegram in these words: "Unless telegram received by us from Brown Brothers on or before October ninth that irrevocable credit (for two hundred and seventy-six thousand dollars) second forty thousand has been established and confirmed will consider you have broken contract and hold you responsible all resulting damages.” No such telegram was received by the plaintiff. In the meantime the price of flour had fallen. The delay until October 9, but no longer, was waived by the plaintiff. It was said by Chief Justice Bigelow in Mullaly v. Austin, 97 Mass. 30, 32: "The rule of law is perfectly well settled that an action may be maintained to recover damages for the breach of an executory contract, before the expiration of the time when the stipulations of the respective parties, if there had been no breach, would have been fully performed. If one party is guilty of a clear infraction of the terms of an agreement, which virtually puts an_ end to it, the other party is not compelled to delay his remedy therefor, because a portion of the contract still remains executory. The breach by one party, by an absolute refusal to fulfil the contract on his part, renders performance by the other party impracticable, and the right to indemnity by an action for damages at once accrues.” Bullard v. Eames, 219 Mass. 49, 53. That principle is applicable to these facts. The plaintiff is entitled to have its damages assessed as of October 9. In accordance with the terms of the report the entry may be Judgment for the plaintiff for the amount found by the jury.