Salem King's Products Co. v. Ramp

HARRIS, J. It appears from the foregoing statement that the plaintiff concluded in 1917 to construct a plant in Salem for the dehydration of fruits, vegetables and berries; and, accordingly, such a plant was erected in 1917, and since that time it has been in operation. The plaintiff does not confine its attention to berries. The plant is operated about 10 months in the year, and only about one month of that period is devoted to loganberries. In order to assure itself of a supply of loganberries the plaintiff sent out field agents in July, 1917, with authority to negotiate with growers of loganberries for deliveries to be made during a period of 10 years beginning with 1918. These field agents were given printed forms of contracts. The field agents worked among the growers for a “couple of days,” but without success. The plaintiff then authorized a rider to be attached to the printed form; and subsequently the defendants signed contracts. It is conceded by all concerned that the rider is a part of the contracts made with the defendants. The Salem Company had a contract with the parent company under the terms of which the whole of the products manufactured by the former was sold to the latter for cost plus 10 per cent. The Salem Company had no resale contracts except the one with the parent company. The Salem Company had not done any advertising. The parent company, however, had made many large resale contracts on the faith of get — 351 — ting the Salem Company’s output for 1919; and the parent company had conducted an extensive and expensive advertising campaign in order to get resale contracts. The defendants made deliveries in 1918; but in 1919 they refused to make deliveries and out of such refusals arose this suit. Each of the ten defendants has a separate contract with the plaintiff; but, notwithstanding this single suit may be said to embrace ten suits, no party has objected to the joinder of these ten growers as parties defendant in a single suit, presumably for the reason that the contracts are substantially alike and the contentions of the defendants are so much the same that all parties tacitly agreed that a single suit would be the most convenient method of settling the controversies. The dispute centers around the typewritten rider attached to the printed part of the contract. The plaintiff insists that the language of the rider is plain and unambiguous and also free from fraud or mistake, and is conclusive upon the parties; and that therefore the obligation of the plaintiff was to pay five and one-half cents and no more for the crop of 1919, while the obligation of each of the defendants was to deliver to the plaintiff all the berries grown on the acreage covered by his contract. The plaintiff insists that these field agents did not make any of the representations attributed to them by the defendants; and the plaintiff also insists that even though it be assumed that the field agents did make the representations as alleged by the defendants, nevertheless the plaintiff is not bound by these representations for the reason that the field agents had authority only to negotiate and did not have authority to execute contracts, and that the defendants had knowledge of such limited authority because the printed form — 352 — provided that “this contract is not valid unless countersigned by the field manager.” The plaintiff says that none of the executive officers made any of the representations relied upon by the defendants. The plaintiff contends that the rider means that the defendants are to receive four cents each year for their loganberries; but that, although the plaintiff is not obliged to buy from other persons or growers in any year, nevertheless, if it does elect to buy additional berries and if it pays more than four cents for such additional berries, then in such event and only in such event the defendants are entitled to receive the same advanced price for their berries. In support of its construction of the rider, the plaintiff points to the alleged fact that notwithstanding the market price exceeded four cents in 1918, the defendants delivered their berries to the plaintiff, thus indicating that the defendants themselves understood the contract to mean that they were not entitled to receive more than four cents, even though the market price should exceed four cents, unless the plaintiff actually bought additional berries for more than four cents. The defendants disagree with the construction placed upon the language of the rider by the plaintiff. The defendants argue that whether the rider is construed by itself or is viewed in the light of what preceded the execution of the contract, in either event the contract cannot be given the construction contended for by the plaintiff. The defendants insist that the rider, standing alone and without extrinsic evidence of the circumstances under which it was made and without any evidence of the negotiations which preceded its execution, means that each year the plaintiff must have for other growers a good faith buying price. — 353 — 1-3. Courts are empowered to construe contracts, but they cannot make contracts for parties. Tbe primary object is to ascertain the intention of tbe contracting parties, and if tbe words used by them are plain, clear, definite and unambiguous, they will be taken as tbe final evidence of tbe intention of tbe parties; and even though contracts contain onerous provisions courts will not, in tbe absence of fraud or mistake, afford relief from them. It is tbe obligation of a party to perform bis unambiguous contract; and if a party be unwilling to perform it is tbe duty of tbe court specifically to enforce such contract where tbe remedy at law is not adequate. "Where tbe intent of the parties is expressed in clear and unambiguous language, there is no need for tbe application of any of tbe rules of construction. Most, if not all, of tbe rules of construction applied by courts have been framed and adopted as instrumentalities to be used as aids in ascertaining the probable intention of tbe parties. Let us now turn to tbe rider and attempt to determine its meaning. 4. The contracts' cover a period of ten years with an agreement by tbe plaintiff to pay a minimum of four cents per pound. Tbe rider declares: “If Salem King’s Products Co. raises their buying price to other growers in 1918, or thereafter, this contract will automatically conform with that price.” Tbe contract must be considered as a whole; and tbe rider must be considered in tbe light of tbe stipulation concerning tbe minimum of four cents. Tbe rider is introduced by tbe word “if.” This is a word of condition, so that tbe agreement to pay more than four cents is conditional. Tbe plaintiff contends that tbe obligation to pay more than four cents is dependent upon two conditions; tbe contention being — 354 — that the rider means that if the plaintiff has a buying price and if the plaintiff raises that buying price “this contract will automatically conform with that price.” We are unable to agree with the plaintiff in its contention that its construction is the one which must necessarily be placed upon the rider; nor can we agree with the plaintiff that its construction is the only one of which the rider is fairly and reasonably susceptible. Nor can we agree with the suggestion of the defendants that the language of the rider was deliberately chosen by the plaintiff’s representatives with a trickish purpose. Although the plaintiff’s construction is clearly not the only construction which may be placed upon the rider nor the only construction which can be fairly given to the rider, it may be assumed that the plaintiff’s construction is at least one of the constructions which may be fairly and reasonably placed upon the rider. Our next inquiry is: Is the rider reasonably susceptible of another equally proper construction? Is it not a fair and reasonable interpretation to say that the rider assumes and implies the existence of a buying price and that the plaintiff will actually have a buying price? When the plaintiff says: That it “raises their buying price” in 1918 or thereafter, does not the Salem Company speak of that which it will have? The word “their” is a possessive pronoun, and in the rider it is used with the value of an adjective. When the plaintiff speaks of raising, it must have something to raise; and that something is “their buying price.” Is it not reasonable to say that the word “if,” the word of condition, only refers to the word “raises” and necessarily assumes the existence of “their buying price”? Is it not just — 355 — as reasonable to say that the existence of “their buying price” is necessarily implied, as contended by defendants, as it is to say that a second “if” is necessarily implied with reference to “their buying price,” as contended by the plaintiff? It seems to us that, even though it be said that the rider is reasonably susceptible of the construction given by the plaintiff, it is also fairly and reasonably susceptible of a second and equally proper construction; and since the rider was attached to the contract for the benefit of the defendants, the plaintiff’s construction must be rejected, for by the terms of Section 721, Or. L.: “When different constructions of a provision are otherwise equally proper, that is to be taken which is most favorable to the party in whose favor the provision was made.” Moore v. Aetna Life Ins. Co., 75 Or. 47, 53 (146 Pac. 151, Ann. Cas. 1917B, 1005, L. R. A. 1915D, 264); Byron v. First Nat. Bank, 75 Or. 296, 300 (146 Pac. 516). This statutory rule is not an innovation, but it is merely a legislative approval of the rule previously established by the judiciary: 22 O. J. 1174. 5. Furthermore, one of the rules by which an ambiguous contract may be interpreted is that the writing will be construed most strongly- against the party preparing it; and, although it has been said that this is the last rule which courts will apply, and then only when a satisfactory result cannot be reached by the other rules of construction, yet if this rule is applied it compels a rejection of the plaintiff’s construction: 13 C. J. 544; Loomis v. McFarlane, 50 Or. 129, 134 (91 Pac. 466). 6. An agreement to have a “buying price” calls for a good faith buying price; for the rule is that if — 356 — a contract is susceptible of two constructions, one of which imputes bad faith and the other implies good faith, the latter will be adopted for the reason that every contract implies good faith and fair dealing between the parties: 13 C. J. 540. 7. Where the language of the contract is ambiguous, equivocal or reasonably susceptible of two or more conflicting constructions, it is competent to resort to parol testimony concerning the circumstances under which the agreement was made or to which it relates, including the situation of the subject of the instrument and of the parties to it, in order, not to add to or detract from or otherwise vary the terms of the instrument, but to enable the court to ascertain what the meaning of the parties really is: Sections 713, 717, Or. L.; Baker County v. Huntington, 46 Or. 275, 278 (79 Pac. 187); Wade v. Northrup, 70 Or. 569, 520 (140 Pac. 451). The only purpose of parol evidence in any such case is to enable the court to understand what the language used by the parties really means, and hence evidence which has no tendency to aid in the construction of the writing or to explain any ambiguity in it cannot be received: 22 O. J. 1179. In order that the judge may be placed in the position of those whose language he is to interpret, it is competent to consider all the facts and circumstances leading up to and attending the execution of the contract, the relation and condition of the parties, the nature and situation of the subject matter, and the apparent purpose of making the contract: 13 C. J. 542, 544; 22 C. J. 1183; 6 R. C. L. 839, 849. 8. We now direct attention to the evidence concerning the facts and circumstances preceding and accompanying the execution of the contracts, as well as evidence of facts occurring after the execution of the — 357 — instruments; and when all the evidence will have been considered it will be clear that the construction contended for by the plaintiff must be rejected. The evidence does not satisfactorily show the exact date when the field agents were first sent out among the growers, nor does it satisfactorily show the exact date when the field agents were first authorized to use the rider; although it is probably correct to say that the field agents began soliciting on Thursday, July 19th, and that the field agents were authorized to use the rider some time on or between Friday, July 20th and Monday, July 23d. Notwithstanding the field agents were actively engaged in soliciting contracts, not a single grower signed a contract until after the authorization of the rider, excepting Bruce Cunningham; but if his testimony is believed his contract was not an exception. In other words, the growers refused to sign the printed contract; and every grower, except A. M. LaFollett, who refused, did so for the reason that the printed form did not allow the growers any increased price in the event the market price exceeded four cents. A. M. LaFollett, a grower but not a defendant, based his refusal upon the ground that it had not been his practice to contract for more than a single crop; and, furthermore, he had been selling his berries to another party who had been paying him the market price and with whom he was apparently satisfied. B. F. Ramp and six of the other defendants were approached by an agent before the use of the rider was authorized, and only three of the defendants were seen for the first time after the rider was authorized. B. F. Ramp and six of the defendants, without exception, according to their testimony and the testimony of corroborating witnesses, refused to sign for the — 358 — reason, expressed by them to the agent, that the printed form precluded them from getting the market price in the event it exceeded four cents; and every one of the defendants who had been interviewed before the authorization of the rider was again seen after the plaintiff authorized the use of the rider and was in effect told that the rider met the objection upon which the refusal had been based. The defendants say with one voice, and the overwhelming weight of the evidence is, that the field agents represented that the Salem Company was anxious to secure acreage; that the company intended to increase its plant; that the process used by the Salem Company enabled it to compete with any other manufacturer; and that it would be in the market every year for berries. Four of the defendants, according to their testimony, never saw the rider until they received their duplicates ; the remaining contracting defendants say they saw the rider. Every one of the defendants who saw the rider before signing the contract says that the agent explained that the rider guaranteed the payment of the highest market price with four cents as the TrnTurrmm. The defendants who did not see the rider until after signing the contract say, without exception, that the agent told them that a rider would be attached to the instrument guaranteeing the highest market price with four cents as the minimum. In other words, in every instance where the agent exhibited the rider to the defendant the agent told such defendant that the rider guaranteed the highest market price; and in every instance where the rider was not shown before the defendant signed the contract, such defendant was told that a rider or clause, or sticker would be attached to the contract guaranteeing to such defendant the highest market price. — 359 — In short, all the signers of the ten contracts involved in this controversy were told by an agent that the plaintiff would buy on the market each year and that the rider guaranteed the payment of the highest market price with four cents as the minimum. "When S. Y. Ramp took over the B. F. Ramp contract he was informed that the rider guaranteed the highest market price. B. F. Ramp and five of the defendants expressly testified that after they received their duplicates they believed, not only on account of the representations made by the agents but also because of their reading and understanding of the language of the rider, that they would be entitled to the highest market price; and the plain inference to be drawn from the testimony of the remaining four contracting defendants is that they too understood from the language of the rider itself that it guaranteed the highest market price, for there is no evidence to the contrary except the circumstances connected with the 1918 deliveries and an alleged admission attributed to one of the defendants. S. Y. Ramp testified that his “interpretation of the contract since its assignment has been that the company was to pay you the highest market price.” The plaintiff claims that the market price exceeded four cents in 1918 and that notwithstanding that fact the defendants made deliveries without objection. There was substantial evidence to the effect that the market price was four cents or less when the picking season opened in 1918, although there is evidence to the effect that at the end of the season the price advanced to five or five and one-half cents. One of the plaintiff’s own witnesses, a buyer with a complete knowledge of the market, said that the price to the growers was three and one-half or four cents at the — 360 — beginning of tbe season; and in their written opinion the trial judges say: “The transactions of 1918 we think are not important for the reason that the market price at the opening of the season, was $80 per ton, and while it advanced after picking commenced, under our interpretation of the contract, the price at the opening of the season would govern.” Two of the defendants, S. Y. Ramp and August Lentz, asked for more than four cents in 1918 because of the advance in price towards the end of the season. None of the other defendants demanded more than four cents because they believed they were receiving the highest market price; and, indeed, according to the overwhelming weight of the evidence they were in truth receiving as much as or more than the amount of the market price if the market price be determined by the price prevailing at the beginning of the picking season. Two of the defendants received intimations towards the end of the 1918 season that the plaintiff did not intend to pay the highest market price; five of the defendants learned for the first time in February, 1919, when visited by Judd and Chapin, that the plaintiff did not purpose to buy in the open market or to pay the highest market price; and the remaining defendants did not know until April, 1919, that the plaintiff had taken the definite position that it would not buy in the open market or pay the highest market price. Anyone reading the record cannot but be impressed with the idea that the defendants all believed that they were entitled under the contract to the highest market price. August Lentz protested and became “mad” when the plaintiff refused to pay more than four cents in 1918. S. Y. Ramp consented to be satisfied with four — 361 — cents in 1918 only after being told that the plaintiff had resold the berries and that the plant had been commandeered; bnt he was careful to inquire later on what the plaintiff intended to do in 1919. W. Howard Ramp and L. S. Murdick told Judd and Chapin in February, 1919, that they wanted the market price. The April, 1919, meeting was the natural result of the information coming to growers that the plaintiff did not intend to pay the market price. The deliveries made in 1918 do not, in the circumstances shown by the record, prove that the defendants then construed the contract as the plaintiff now construes it. The conduct of the defendants indicates protest against rather than acquiescence in the refusal of the plaintiff to pay the highest market price; and, according to the testimony of the defendants, there were objections by the defendants upon every occasion where the plaintiff either intimated or frankly declared that it would not buy on the open market or pay the highest market price. 9. The plaintiff argues that the field agents were agents with limited authority; that the provision requiring the signature of the field manager was notice to the defendants of such limited authority; and that, therefore, the plaintiff is not bound by any representations made by the field agents about the expansion of the plant or about the plaintiff’s alleged purpose each year to buy on the market. It is true that the field agents did not have any authority to make a contract; but it is also true that they did have authority to solicit growers to sign and to explain the meaning of the contract; for Mason Wittenberg, president of the company, testified that the agents were authorized “to explain the contract, the price, and the terms of the growers, and secure the growers ’ signature to the contract. ’ ’ According to the — 362 — testimony of the defendants and other witnesses who were present when some of the contracts were signed, the field agents did explain the language of the rider either by showing the rider and saying that it meant the highest market price, or by saying that a rider would be attached guaranteeing the highest market price. This is not a case where the rider plainly means one thing and one thing only and the agent has explained that it meant something different; but this is a case where the language of the rider is reasonably susceptible of two constructions and an agent with authority to explain the rider exercises his authority and does explain the rider by giving to it one of the constructions of which it is reasonably susceptible. Moreover, there is substantial evidence that some of the executive officers, executives vested with authority to bind the plaintiff, told some of the defendants that the rider meant exactly what the two field agents, Gruy Coe and Luther J. Chapin, were telling and had told the growers it meant. Representatives of the plaintiff saw Bruce Cunningham three times before he finally signed a contract dated July 20, 1917. It will be remembered that Stanley Armstrong was the field manager in 1917; and it may be further explained that he continued to act as field manager until February, 1918, when he severed his connection with the plaintiff, and, according to our understanding, he was immediately succeeded by Luther J. Chapin as field manager. Cunningham testified that Chapin and Armstrong were together and while together they “Talked about what they were going to do; the plant they was building down here, what they was going to do, what they was going to build to it; they said they were going to put up three more units, and — 363 — they would be continually in the market for berries, and that they wanted 1,000 acres of berries.” Cunningham testified that they (Chapin and Armstrong) said: “They had a very good proposition, that it was the best thing ever presented to the growers, that they would give us four cents and in addition to that they would put a rider on the contract that would protect us in the line of future advance in the market. * * I was led to believe they would be continually in the market, and if the market would go up we would get the benefit of the rise. I asked Mr. Armstrong what assurance would we have that we would get that rise; he said: ‘This slip we attach protects you.’ ” A. E. Harris, another defendant, testified that in May, 1918, a time when Chapin was field manager, Chapin told him- that “this [the rider] guarantees you the market price.” According to the testimony of August Lentz he was interviewed at his place first by Coe and afterwards on July 21, 1917, by Chapin. Lentz says that Chapin filled out a contract but that he did not then sign it; that after talking it over with his wife and boys at the end of three or four weeks he went to the plaintiff’s office and there found Chapin who told him— “This saves it, if any raise in price we raise, and we pay you the highest price for berries.” Chapin testified that his connection with the plaintiff dated from May, 1917, and that “during the first few months I had charge of the office here in the absence of the field manager, directing the stenographer and attending to the correspondence, general duties.” S. Y. Ramp testified that after berry picking in 1918 he saw Mr. Walker (the plant manager) and— “I said: ‘What are you going to do about next year, are you going to pay the market price or not?’ — 364 — He said: ‘You can depend we will be fair to the grower.’ ” Tbns it is seen that there is evidence that the executive officers were themselves making the same representations concerning the proposed expansion of the plant and the same representations concerning the purpose of the plaintiff to buy on the open market and were also making the same explanation of the meaning of the rider as was made by the field agents. 10. We cannot agree with the contention of the plaintiff that the first separate defense amounts to an admission that the defendants gave to the rider the same meaning as is given to it by the plaintiff. In substance the first separate defense declares that the plaintiff represented to the defendants that the plaintiff would attach a rider with certain words, but instead a rider differently worded was attached. It is true that in this defense the defendants allege that if the plaintiff bought in the open market at an advanced price, such act would automatically increase the price to the defendants. However, nowhere in this defense do the defendants say that a failure to buy on the open market at an advanced price prevents the defendants from recovering an advanced price; but upon the contrary in their third separate defense the defendants say that, regardless of the words actually used in the rider, the plaintiff ought to be estopped to say that the rider does not mean that the plaintiff is obligated to buy on the open market each season. The evidence is conflicting. The witnesses for the defendants considerably outnumber those for the plaintiff; and although the issues are to be determined by the weight of the evidence rather than by — 365 — the number of the ■ witnesses, yet the fact that so many witnesses substantially agree with each other upon material matters is not without some weight, in the circumstances shown by the record. The trial judges were in a far better position to appraise the value of the testimony of the respective witnesses; for the trial judges had the benefit of seeing and hearing the witnesses testify, while we are without that advantage, since our information concerning the subject of the controversy and the persons and parties connected with it is confined to the cold and inanimate words printed in the record. The trial judges held that— “ ‘Their buying price to other growers’ under the usage of the business, means the price paid in fair competition at or about the opening of the picking season.” We think the contract is ambiguous and is fairly and reasonably susceptible of the construction contended for by the defendants and also, we may assume, fairly and reasonably susceptible of the construction contended for by the plaintiff. If the contract is construed standing alone and by itself, the ambiguity must be resolved against the plaintiff, because the plaintiff concedes that it framed the rider and plainly on its face the rider was prepared for the benefit of the defendants. If the contract is viewed in the light of what preceded and' accompanied as well as what followed its execution, the ambiguity must likewise be resolved in favor of the defendants. The trial court resolved the issues of fact against the plaintiff. The evidence does not warrant us in disturbing the findings made by the trial judges. The plaintiff refused to perform the contracts, except as — 366 — construed by it; and this justified tbe trial court in decreeing a cancellation of tbe contracts. Tbe decree is affirmed. Affirmed. Rehearing Denied. Burnett, C. J., and Benson and McBride, JJ., concur.