Crane v. C. Crane & Co.

CROSSGUP, Circuit Judge, delivered tlie opinion of the court, as follows: The question lying at the threshold of this case is whether the so-called contract of December, 1896, relating to the sale of dock oak lumber for the year 1897, and -th,e so-called contract of January, 1898, relating to the same subject for the year 1898, are enforceable. The contention is that, being in parole, tlie first is obnoxious to the Statute of Frauds, and both are void for want of mutuality. It is within legal competency for one to bind himself to furnish another with such supplies as may he needed during some certain period for some certain business or manufacture; or with such commodities as the purchaser has already bound himself to furnish another. Reasonable prevision in business requires that such contracts, though more or less indefinite, should he upheld. Thus a foundry may purchase all the coal needed for tlie season; or a furnace company its requirements in the way of iron; or a hotel its necessary supply of ice. Minnesota Lumber Co. v. Whitebreast Coal Co., 160 Ill. 85, 43 N. E. 774; National Furnace Co. v. Keystone Mfg. Co., 110 Ill. 427; Railway Co. v. Witham, L. R. 9 C. P. 16; Smith v. Morse, 20 La. Ann. 220. So, too, a dealer in coal in any given locality may contract for such coal as he may need to fulfil his existing contracts, regardless of whether delivery by him to his customers is to he immediate or in the future. Shipman v. Mining Co., 158 U. S. 356, 15 Sup. Ct. 886, 39 L. Ed. 1051. In all these cases, contracts looking towards the future, and embodying- subject-matter necessarily indefinite in quantity, have been upheld; but it will be observed that, although the quantity under contract is not measured by any certain standard, it is capable of an approximately accurate forecast. The capacity of the furnace, the needs of the railroad, [872] or the requirements of the hotel are, within certain limits, ascertaináblé by the vendor. He is thus enabled to make reasonably accurate calculation óf the extent of his obligation. Then, too, the purchase is only an incident of the vendee’s business. Presumably the- business will go on irrespective of a rise or fall in the prices of. subsidiary supplies. There thus remains to the vendee little or no temptation, on account of the rise or fall in prices, to greatly enlarge or diminish the quantity of his orders. The contracts brought to our attention have no such standard of approximate certainty, and no such safeguard against opportunity to. impose upon the vendor. Plaintiffs in error were at the time engaged in no manufacture or business that required dock óak lumber as an incidental supply, nor were they under any contract to deliver such lumber to third persons at fixed prices. They were lumber merchants pure and simple — middlemen between the defendant in error, and such customers as usually come to a merchant. Should the contract under discussion be upheld, the plaintiffs in error would be held to occupy this advantageous situation: If the prices of dock oak lumber rose, they would, by that much, increase their ratio of profits, and probably, coming into a situation to outbid competitors, increase, also, the quantum of orders; if, on the other hand, prices fell below the range of profits, the orders could be wholly discontinued. On lihe contrary, the situation of the defendant in error would be this: Should prices fall, it could not compel the plaintiffs in error to give further orders; but, should prices rise, the orders sent in would be compulsory, and the loss measured, both by the increase of-the ratio of profits, and the probable increase of the quantum of orders. It is needless to say that such a contract is unilateral, and void for want of mutuality. It, in effect, binds the defendant in- error alone, for it leaves the plaintiffs in error — whose whole interest is embodied in the prices obtainable — in a situation to either go on, or to discontinue, as such interest developes. - This disposes of every specification of error relating to set-off or recoupment, except such as relate to the order of April 8th, 1898. The consideration of this order involves a state of facts, and an application of the law, wholly apart from the general contracts just discussed. There was testimony, sufficient to go-to the jury, tending to show, that this order was accepted by the defendant in error, and was, from the date of such acceptance, independently of any general contract, a binding obligation between the parties; that upon that date, and for years previously, the parties had had mutual dealings in the • general lumber trade, including dock oak lumber; that, on account of .these dealings, a mutual debit and credit account was kept; that there was no distinct understanding respecting the length of credit to be given upon the respective orders, but that, customarily, shipments of lumber were paid for, either in cash promptly, or by sixty or ninety day paper; and that on the first of June there was due to the defendant in error upon these dealings, on account of deliveries .in 'April and May, the sum of about thirty-eight hundred dollars, [873] twenty-one hundred of which was for lumber delivered under "the order of April. 8th. There was, also, testimony, sufficient to go to .the jury, tending to show that the lumber embraced in the order of April 8th was to be delivered in thirty and sixty days; that a portion was delivered, but much the larger portion remained undelivered; that the plaintiffs in error, from time to time, until the third of June, urged more speedy deliveries; that the defendant in error, in substance, responded that it was doing all it could, to fill the order; that in this state of the transaction the defendant in error, near the end of May, began urging the payment of the arrearages; that plaintiff's in error confessed the arrearage, but countercharged the defendant in error vrith its failures to deliver; and that finally, but not until the third of June, five days before the defendant in error’s time to fill the order would have expired, it was, for the first time, distinctly stated by the defendant in error that there would be no further compliance with the contract until the arrearages were paid. It is fairly questionable if, at this later date, the arrearages had been paid, the defendant in error could, within the time stipulated, have fulfilled its contract by the delivery of the remaining lumber. The contract created by the acceptance of the order of April 8th was an entirety. The failure of the plaintiffs in error to pay, within the customary period, the price of each delivery did not avoid the contract until the defendant in error, by some action, distinctly and reasonably asserted, attempted a rescission. Default in respect to one several part of a contract will not entitle a party to disregard the whole as a nullity, unless there has been a renunciation of the entire contract. Norrington v. Wright, 115 U. S. 188, 6 Sup. Ct. 12, 29 L. Ed. 366. In some states the rule has been held that where an entire contract is made for the sale and delivery of personal property, either for a gross sum, or at a certain price per unit of its measure or weight, and it is only in part performed by the vendor, no action can be maintained on the contract for such part performance; in. other states the rule is held that if the vendee retains the part delivered after the vendor has made default in respect to the residue, it is severance of the contract, and the vendor is entitled to recover the contract price for what is so delivered and retained, subject to recoupment of such damages as the vendee sustains for nonperformance of the entire contract. Suth. Dam. § 615. Applying either of these rules to the case under discussion, it is clear that if the defendant in error had postponed until the eighth of June — the expiration of the sixty days — -its announcement that the contract would not be further complied with, there could have been upon its part, either no recovery at all of the twenty-one hundred dollars due for deliveries already made under the order of April 8th; or only such recovery as remained after recouping against it such damages as the plaintiffs in error suffered by reason of the non-deliveries. Does the fact that the disfinct attempt at rescission came five days before the expiration of the sixty days change the-rights of the parties? [874] The answer to this question, we think, depends upon some questions of fact that ought to have been submitted to the jury. The evidence discloses that the deliveries actually made by the defendant in error were proportionately small, throughout the fifty-five days that the contract ran unrescinded, in comparison with the whole quantity of lumber ordered. It might have been shown that deliveries, in respect of time, were expected to take place at the option of either the vendee or the vendor, but no such testimony was submitted. In its absence, the law so construes the contract, that deliveries should run ratably through the whole sixty days allowed. In such case the act of rescission came after the great bulk of deliveries ought to have been made, and could not, therefore, affect the vendor’s liability for its previous failure to deliver according to the contract. It might be, also, that the act of rescission, coming so shortly before the expiration of.the time within which deliveries could be made, evinces such a state of facts, that the jury could reasonably presume that it was not interposed in good faith on account of the arrearages in the payment, but was thrpwn out rather as a pretext to cover the vendor’s sense of its own default. However we look at it, there should have been a submission of the questions of fact arising upon the order of April 8th, to the jury, under appropriate instructions, and for the error of the Circuit Court, in this respect, the judgment must be reversed, with directions to grant a new trial. ' WOODS, Circuit Judge, concurs in the result.