H. R. Wyllie China Co. v. Vinton

HARRIS, J. It must be remembered that no order was accepted by the plaintiff after September 26th, and that all the orders involved in this controversy, except one, were given to and accepted by the plaintiff prior to September 26th. It must be remembered, too, that all the orders which had been filled had been paid for, except the orders filled on and between October 21st and October 30th, aggregating, with the prepaid freight charges, $1,168.42. It must also be remembered that on November 18th more than fifteen days had elapsed since October 30th, the date of the last invoice. It must likewise be remembered that on November 18th thirty days had not yet elapsed since October 21st, the date of the first invoice. The parties are agreed that the prices fixed for the invoices dated on and between October 21st and October 30th are correct, and that they have not been paid. The controversy centers around the counterclaim. The plaintiff alleges in its complaint that it accepted and filled the orders on the “distinct understanding” that Vinton would pay the amount of — 361 — each invoice “not later than fifteen days from the date of the invoice,” and that, since more than fifteen days had elapsed since the date of the unpaid invoices, the refusal of Vinton to pay operated as a breach and permitted the plaintiff to terminate the contract. The evidence given in behalf of the plaintiff and the instructions of the court introduced into the case an additional element, not pleaded by the plaintiff. There was testimony to the effect that Vinton’s credit was limited to $1,000, and that Vinton agreed to honor a draft whenever the unpaid invoices amounted to $1,000. Vinton denied that there was at any time an agreement limiting his credit to $1,000, or obligating him to honor a draft whenever the unpaid invoices aggregated $1,000, and he claimed that at all times the agreed terms were “1%, 15 days, 30 days net,” and that, for the reason that on November 18th thirty days had not yet elapsed since the date of any unpaid invoice, he was not in default, and that, therefore, the contract was breached by the plaintiff and not by Vinton. Since the rights and obligations of the parties are necessarily governed by the terms of the contract or contracts under which the orders were to be' filled, it became important at the trial to ascertain those terms. The contention of the plaintiff as to the terms of the contract presents itself in two phases. On the one hand, the plaintiff says that from the beginning it was understood that each invoice should be paid within fifteen days from its date; and, on the other hand, the plaintiff says that, even though it be assumed that the terms were originally “1%, 15 days, 30 days net,” as claimed by the defendant, nevertheless, those terms were modified on September — 362 — 26th, and from that date it was understood that each invoice should he paid for within fifteen days. The court asked the jury to ascertain the terms of the contract. 1, 2. There were no oral negotiations or oral agreements between the parties until September 26th. All the negotiations and agreements made prior to September 26th were evidenced by writings. The defendant argues that, since the contract governing the parties until at least September 26th is evidenced by writings, it was the duty of the court at all events to construe those writings, and to tell the jury what the terms of the contract were. In other words, the defendant argues that the most that could have been submitted to the jury was whether or not the contract which existed to and until September 26th was on that date modified by an oral agreement, and, if modified, whether the terms were as claimed by the plaintiff. Of course, the legal effect of a writing is ordinarily to be determined by the court, and not by the jury: Henry v. Harker, 61 Or. 276 (118 Pac. 205, 122 Pac. 298). In the instant case, however, some of the writings contain statements which afford support for the contention of the plaintiff that from the beginning Vinton agreed to pay on each invoice within fifteen days, as, for example, the letter of July 7th, in which Vinton says: “For your information might state that it is our intention to discount your bills”; and the letter of August 31st, in which Vinton declares : “As stated to you when we first began sending you orders, we fully expect to discount all of our bills with you.” — 363 — On the other hand, some of the writings contain statements supporting the position taken by the defendant, for upon every invoice sent to Vinton there was typewritten the following: “lfo, 15 days, 30 days net.” The plaintiff offered evidence which it says explains these typewritten words and figures and harmonizes them with its contention that each invoice was due within fifteen days. We do not think that the court can say as a matter of law, after an inspection of the writings, that the agreement was as claimed by the plaintiff or as contended for by the defendant; but it was appropriately a question for the jury to decide what the parties intended, after viewing the writings in the light of the course of dealing followed by the parties, and in the light of the accompanying circumstances. 3. If the terms fixing the time of payment were changed at all, the change was made orally on September 26th; and-the modification, if any there was, was understood to apply, not only to any future orders that might be given and accepted, but also to the then accepted, but unfilled, orders. All of the unfilled orders in the hands of the plaintiff on September 26th constituted, the defendant contends, contracts. If these unfilled orders were contracts, they were bilateral executory contracts; and the parties could therefore modify them by fixing a different time for payment. There is much contrariety of judicial opinion concerning the question of the necessity of a consideration, and concerning what constitutes a sufficient consideration for the modification of an existing executory contract; and, although the defendant apparently concedes that, if there was a modification agreed upon by the parties on September 26th, the modification became legally effective, still we — 364 — deem it appropriate to say that in our view, if there was á modification on September 26th, the modification became effective and was binding on both parties, especially since the plaintiff was contending that the defendant had defaulted in his previous payments, and the defendant was insisting that the plaintiff had been unreasonably slow in making shipments: Capital Food Co. v. Mode & Clayton, 112 Ark. 165 (165 S. W. 637); 35 Cyc. 124; note in L. R. A. 1915B, 17; 3 Elliott on Contracts, § 198§; Scott v. Hubbard, 67 Or. 498, 506 (136 Pac. 653); Feldman v. Fox, 112 Ark. 223 (164 S. W. 766); 1 Elliott on Contracts, § 243. The American authorities are in irreconcilable conflict upon the question as to whether or not the seller may terminate the contract on account of a default in the payment of an installment, when the contract provides for the sale and delivery of a given commodity in stated installments which are to be separately paid for.* In this country it is probably accurate to say that the weight of judicial opinion is now to the effect that, if the buyer defaults in the payment of a given installment, the seller may treat the default as a breach and terminate the contract, without incurring any liability for damages for the failure to make delivery of subsequent installments Ross-Meehan Foundry Co. v. Royer Wheel Co., 113 Tenn. 370 (83 S. W. 167, 3 Ann. Cas. 898; 68 L. R. A. 829); Ohio Valley Buggy Co. v. Anderson Forging Co., 168 Ind. 593 (81 N. E. 574, 11 Ann. Cas. 1045); Alpha Portland Cement Co. v. Oliver, 125 Tenn. 135 (140 S. W. 595, Ann. Cas. 1913C, 120, 38 L. R. A. (N. S.) 416); 24 R. C. L. 280. According to what is probably the minority view, the failure of the buyer to pay an installment does not give the seller an absolute right to terminate the — 365 — contract, unless, in addition to the naked act of failure or refusal to pay, the conduct of the buyer shows an intention on his part to abandon or no longer be bound by the terms of the contract, as, for example, where the default is accompanied with a deliberate demand insisting upon new terms different from the original agreement: Johnson Forge Co. v. Leonard, 3 Penne. (Del.) 342 (51 Atl. 305, 94 Am. St. Rep. 86, 57 L. R. A. 225). Prior adjudications are our warrant for declaring that Oregon may be included among the jurisdictions where the minority view prevails : Barnes v. Leidigh, 46 Or. 43, 45 (79 Pac. 51); Longfellow v. Huffman, 55 Or. 481, 486 (104 Pac. 961); Krebs Hop Co. v. Livesley, 59 Or. 574 (114 Pac. 944, 118 Pac. 165, Ann. Cas. 1913C, 758); Armsby v. Grays Harbor Commercial Co., 62 Or. 173, 183 (123 Pac. 32); Walker v. Warring, 65 Or. 149, 156 (130 Pac. 629). 4. According to the rule which governs in this jurisdiction, the failure of the buyer to pay an installment does not alone and of itself enable the seller to terminate the contract, so as to avoid liability for failure to make subsequent deliveries called for by the contract; but, in addition to the bare fact of - failure to pay, the conduct of the buyer must indicate an intention on his part to abandon the contract, or a design no longer to be bound by the terms agreed upon. In some of the states, including Oregon, legislation has been enacted governing the subject. However, the instant case is not controlled by Chapter 91, Laws of 1919, for the reason that it is expressly provided in Section 76a of the statute that the act shall not apply to any sale or contract to sell “made prior to the taking effect of this act.” — 366 — 5. Of course, the parties may expressly stipulate that payment for one delivery shall be a condition precedent; and, consequently, if a contract for the continuing delivery of wares contains such a stipulation, the failure of the buyer to pay a given installment enables the seller to rescind, regardless of what the rule might be in the absence of such a stipulation: West v. Bechtel, 125 Mich. 144, 163 (84 N. W. 69, 51 L. R. A. 791); Johnson Forge Co. v. Leonard, 3 Penne. (Del.) 342 (51 Atl. 305, 94 Am. St. Rep. 86, 91, 57 L. R. A. 225). If, therefore, the payment of each invoice was by agreement made a condition precedent as to subsequent orders, then the plaintiff had the absolute right to terminate the contract if the defendant refused to pay any installment within the time fixed for payment. If from the beginning the payment of each invoice was made a condition precedent as to subsequent orders, then there was no modification of the contract on September 26th, unless it can be said that the parties agreed to limit the defendant’s credit to $1,000, with the right on the part of the plaintiff to draw on the defendant whenever the unpaid invoices aggregated $1,000, regardless of whether or not fifteen days had elapsed since the dates of the invoices. If in the beginning the contract allowed Vinton a discount of 1 per cent if he chose to pay within fifteen days, and also allowed him the privilege of taking thirty days without a discount, then, if there was a modification on September 26th, the change included either one or two particulars. If there was only one change, it may have related to the limitation of fifteen days claimed to have been fixed for the payment of each invoice, or it may have related to the limitation of $1,000 said to have been placed upon Vinton’s credit. — 367 — All of tlie invoices dated on or between October 21st and October 30tb were more tban fifteen days old; bnt they aggregated more than $1,000. It may have been that the jury fonnd that the defendant’s credit was limited to $1,000, but that the defendant was, under the contract, entitled to take thirty days for the payment of each invoice, unless the aggregate of the invoices amounted to $1,000. The court submitted to the jury the question of the limitation upon defendant’s credit, notwithstanding the fact that the pleadings were silent upon that subject. We do not attempt to determine whether the plaintiff’s pleadings permit the introduction .of evidence showing a modification of a prior contract, for the reason that this question is not argued in the briefs. However, it is manifest that, in view of the issues made by the pleadings, the instructions given by the court concerning the subject of the limitations upon Vinton’s credit were prejudicially erroneous; and the judgment must therefore be reversed and the cause remanded for a new trial. Reveesed and Remanded. McBride, C. J., and Benson and Burnett, JJ., concur.