J. M. Ackley & Co. v. Hunter-Benn & Co.'s Co.

SIMPSON, J. The bill in this case was filed by the appellee (a corporation), against the appellant, pray — 304 — ing for discovery, a reference, and statement of accounts, and an injunction. On February 7, 1902, appellant and appellee entered into a contract, the material parts of which will be set out in the statement of the case. Said Hunter, Benn & Co. sold certain timber to said J. M. Ackley & Co.; and in the contract of sale it is stated that, “in consideration of it so selling said stumpage the said Hunter, Benn & Co. is hereby given the option for sixty days to make a contract with said J. M. Ackley & Co.,” by the terms of which said J. M. Ackley & Co. were to sell to said Hunter, Benn & Co. all of the sawn timber of certain quality manufactured .from the logs cut on said land. Said Hunter, Benn & Co. elected to take said option, within the time fixed, and, after several deliveries had been made and paid for, difference of opinion arose as to how the timber was to be “averaged,” and, on the refusal of said Hunter, Benn & Co. to pay for two rafts delivered according to the specifications of J. M. Ackley & Co., the attorney of the latter gave a written notice canceling the contract. So this brings up the construction of the contract, and the question as to whether said party had a right to cancel the same. The contract is entire, and the option to purchase the sawed timber is stated to be in consideration of the selling of the standing timber. When that option was taken, the provisions with regard to the purchase of the sawed timber became a part of the contract, as fully as if they had been embodied therein without any proviso as to the option. That being the case, neither party could cancel a part of the contract, without canceling it entirely. The contract described the standing timber sold, as “all of the pine trees standing upon said lands which are of such size that, when all of them shall have been — 305 — manufactured into sawn timber, the average of the en tire lot shall be not less than 30 cubic feet per stick. It is understood between the parties hereto that it is not practicable to log any lands so that the timber manufactured from such logs shall average an exact number of feet per stick, and it is agreed that, in this case, such reasonable variations from a 30-foot average as may result from this cause shall not be deemed a violation of this contract, or entitle either party to claim anything from the other on account of such variation.” The manufactured timber to be sold back to said Hunter, Benn & C'o. is the sawed timber and hewed timber, of certain dimensions, at certain prices “per cubic foot on a. basis of 40 cnbic feet average,” for the sawed timber, and 100 cubic feet average as to the hewed timber; and it is provided that “payment for all said timber shall be in cash on delivery of specifications, and that the said timber shall be inspected at seller’s expense by W. J. Thornton, of Mobiie, Ala,, whose inspection shall be final.” It is provided that the timber shall be delivered at a certain place “in all respects as deliveries are now made by the said J. M. Ackley & Co. to W. H. Greenwood & Co., under the contract now existing between them.” The Greenwood contract provides: “Delivery to be made at buyer’s boom as fast as water will permit, and timber is gotten.” It is also provided in writing, at the close of the printed matter, in the Greenwood contract, “that each and every raft is taken on its own average, and there shall not be two averages worked on any one raft, and that no raft shall contain less than 300 pieces, said average, if any, to be made at their mill boom.” In explanation of the use of the word “average,” it seems that it makes a considerable difference as to the amount of money to be paid for the timber, according as the average is made on each raft, or each delivery of — 306 — several rafts, or on the whole amount finally delivered. Thus the timber might be so manipulated that a raft would contain something less than the prescribed quantity, yet, under the saving clause of the contract, if the average was made on that raft alone, the payment would be as of the prescribed quantity; whereas, if said raft was taken in with one or more other rafts, and the average made on all together, the seller would not get the benefit of these fractions, and the result would be that he would receive much less than he would, on the single average plan. And in other ways the rafts may be so manipulated as to increase the payment to the seller. It is claimed by the appellee that appellant was not complying with the agreement- in regard to delivery “as fast as water will permit and timber is gotten,” but was holding back the timber, when gotten out, for the purpose of manipulating it, so as to get the advantage by having an average made on each raft. Consequently, when two rafts were delivered at the same time, said Hunter, Benn & Co. (appellees) insisted on making the average on both together, ■ and not on each raft separately, and also insisted that, on a final settlement, all of the deliveries should be added together and a general average made, which would adjust all inequalities in the separate deliveries. Said J. M. Ackley & Co. (appellants) refused to accept'said average, and thereupon its attorney addressed the letter to Hunter, Benn & Co., cancelling the said contract “for the sale and delivery of timber,” “on account of your (their) noncompliance with its terms.” While the expressions in the contract are not as clear as they might be, yet we hold that its meaning is that the reference to the Greenwood contract points, not merely to the clause requiring rapid delivery, but also to the written clause which prescribes the number of pieces which shall be in a raft, and that carries with — 307 — it the remainder of the paragraph prescribing how the average shall be made. All of these matters pertain to the manner in which the lumber shall be delivered and received. The expression in the contract, that deliveries are to be made “in all things” as in the Greenwood contract, indicates an intention to include the provisions of the written clause relating to delivery, as well as the first clause about rapid delivery, which could have been expressed in a few words, without reference to the Greenwood contract. The evident intention of the clause prescribing the number of logs to be in a raft was to prevent the manipulation of rafts so as to increase the price, by means of the average, and the provision that “each and every raft is taken on its own average, and there shall not be two averages worked on any one raft,” shows that the raft was to be the basis of averaging. It may be that it was thought that each delivery would be in one raft; but it is not so stated, and the language of the contract does not admit of any other interpretation than that each raft was to be averaged to itself. All contracts are presumed to intend good faith on the part of the contractors, and the evident purpose of the provision requiring deliveries as fast as water will permit and timber is gotten is that, as soon as the timber can be gotten out, and assembled in such quantities as are usually sbipperl together, the same shall be delivered. Of course, the party selling the timber must be allowed some discretion, in consulting his own convenience as to the quantities to be shipped at one time; but any manipulation of the deliveries for the purpose of working a fraud on the other party will be rebuked by the court. The provision with regard to reasonable variations from the 30-foot average was intended merely, as it states, to provide against the impracticability of so logging the land that each log shall contain the exact — 308 — number of feet, and it is intended to protect the party ■only from “such reasonable variations * * * as may result from this cause.” It contemplates good faith in the attempt to bring out such average, and is not intended to authorize the seller to manipulate the deliveries, so as to work out an increase in the price to be paid for the timber. The reference to the deliveries made under the Greenwood contract must refer to the manner of delivery provided by that contract, and not to any delivery which the ■parties to that contract may have sanctioned, other ■than as provided in the contract. In addition to what has been said as to the right of rescission of the contract in this case, it may be said that it is not every disagreement, as to the terms of a ■contract, which authorizes one of the parties thereto to ■declare the contract annulled. “The renunciation must cover the entire performance to which the contract binds the promisor.”—9 Cyc. 636. It must be “distinct ■and unequivocal.”—Id. p. 637; Smoot’s Case, 15 Wall. 37, 47-48, 21 L. Ed. 107. The letter from the complainant, on which the respondent undertook to rescind the contract, or a part of it, first calls attention to the fact of Mr. Hunter’s interpretation of the contract as to averages, asks that respondent note this for future invoices, and states, “We ■can square up in our next payment the difference in •deliveries already made.” The postscript merely points out that it is a question of invoicing, rehearses the terms of the contract, and says, “You have therefore to deliver to us all the sawn timber, cut, and we are ready and willing to pay for it, in accordance with the •contract.” In addition to this, it is shown that afterward the money was tendered to the respondent, in •accordance with its demands, reserving the matter of the construction of the contract to be determined in the future. — 309 — For these reasons, as well as upon the grounds before stated, the respondent had no right to rescind the contract or any part of it. We do not think that the so-called refusal of the complainant- comes up to the conditions laid down by the authorities referred to in the brief of appellant, to-wit, Hieronymus Bros. v. Bienville Water Sup. Co., 131 Ala. 447, 454, 31 South. 31; Worthington & Co. v. Gwin, 119 Ala. 44, 53, 54, 24 South. 739, 43 L. R. A. 382; 9 Cyc. 649. This court has laid down the principle that, where one party desires to rescind a contract, and the other party has not repudiated it, it is his duty to notify the opposite party and to give him a reasonable time within which to comply with the terms of the contract.—Elliott v. Howison, 146 Ala. 570, 587, 40 South. 1018. So that, even if the action of the complainant justified tne rescission (which it did not), the respondent’s claim that the contract was rescinded and could not be revived by the subsequent offer of the complainant to pay for the timber in accordance with the demands of the respondent is untenable. Nor can it be said that said subsequent offer showed a determination to abandon the contract. It merely left the difference of opinion as to the construction of the contract to be determined in the future. In the original contract between the parties it is provided that “payment of all said timber shall be, in cash, on the delivery of specifications, and that the said timber shall be inspected, at seller’s expense, by W. J. Thornton,, of Mobile, Ala., whose inspection shall be final.” The evident purpose of providing for this inspection was to ascertain, before the timber was accepted, its grade, and whether it was in accordance with the contract; and the intention is as clear that, when the timber was inspected and received, that transaction was closed. The inspection was final and con310 elusive on both parties, and neither party could afterward claim that it was not properly inspected and received, or that there should be a reaverage of the entire amount received, and a readjustment of accounts on said new average. Of course, all contracts can be opened up for fraud, and if a fraud was perpetrated, by either party, in the delivery of the timber; that could be inquired into; .but that would not cover an error in the average, where both parties had the timber and all the facts before them and agreed on the average and inspection then made. It results that the question as to whether the complainants were within their contract rights, in refusing to pay for the two rafts offered on December 13, 1902, depends upon the further question whether the timber had been held back contrary to the provisions of the contract, and the rafts manipulated contrary to the spirit and intent of the contract. But, however that may be, as before stated, the respondents were not authorized to cancel the contract, and having attempted to do so, and proceedig to sell the timber contrary to its provisions, they are liable for damages; and the measure of damages is correctly stated by the chancellor, to wit, the difference between the contract price, and the price at which said rafts were sold. At least, the sellers cannot complain. The chancellor’s decree adopts the same construction of the contract which we have given. It provides that each raft he taken at its own average, and as to the timber ent, but not delivered, in place of taking the general average of the whole, he adopted the only feasible way of making the average, according to the contract, to wit, making the average on each 300 sticks as fast as they were cut, and could have been delivered. — 311 — Respondent’s objections to tbe register’s report are based on the claim that they had a right to rescind the contract, and are not liable in damages for the results of their attempting to do so, and on the claim that, as to the rafts delivered December 22, 1902, and not paid for, the register found the amount due, in accordance with the chancellor’s directions; but the chancellor changed that item and made the estimate contrary to the directions of the decree. The direction in the decree is that said Ackley & Co. were to be credited, with the contract price of the rafts delivered and not paid, “Each raft to be taken on its own average, and no raft to contain less than 300 pieces.” The agreement between the parties shows that the delivery of December 22, 1902, “On the basis of a separate average for each of said rafts amounted to $2,821.49,” while the price “calculated on the basis of one average for both of the rafts combined was $2,629.08.” The register reported the value of these rafts, in accordance with the decree and the agreement, at $2>y 821.49. The complainant moved the court to reduce this item, “because it appears from the evidence submitted at the reference that the said valuation of said rafts was based upon the making up of separate averages by means of holding back timber in violation of the terms of the contract,” and the chancellor granted the motion and reduced the item to $2,629.49. The only evidence which the register had before him was the agreement of the parties, and there is nothing said in said agreement about timber being held back in violation of the terms of the contract. Consequently, the chancellor erred in reducing this item. The respondent was allowed the abatement claimed by it, on account of the failure of title of part of the lands, and, as the general statement of the accounts shows that the respondent is indebted to the complainant, the respondent recovers nothing on his cross-bill. — 312 — Tbe decree of tbe chancellor will be corrected, by-substituting $2,821.49 in place of $2,629.49 and omitting the $97.57 interest, as above indicated, leaving the amount due March 4, 1909, $17,286.33, as found by the-register; and, as so corrected, the decree of the chancery court is affirmed. Corrected and affirmed. - Dowdell, C. J., and McClellan and Mayfield, JJ., concur.