International Agricultural Corp. v. Stadler

DENISON, Circuit Judge (after stating the facts as above). [1-3] 1. This contract was not the ordinary contract of warranty, a breach of which in some jurisdictions does, and in other jurisdictions does-1 not, require prompt notice from the purchaser in order to preserve his right of complaint. It is true the contract incidentally refers to its “guaranty,” but the contract was informally drawn by brokers, and its true character cannot be determined by the casual use of a term; indeed “guaranty” is not always synonymous with “warranty,” nor is-it inapt in this situation. We think the contract plainly contemplates that the exact proportions of the tankage may not always be the same, that the percentages may vary from a specified standard, and that, in such case, the purchaser has no right of rescission-, but should receive-the tankage and claim the contract deduction.. Of course, we do not mean that the discrepancy might not be so extreme as to render the material unsuitable for its intended use, .and so justify rescission; but that is not the condition foreseen and covered by the words chosen. It is now the argument of the buyer’s counsel that the contract should, be characterized as one for the purchase of units of ammonia and bone phosphate. This is a proper characterization, with two exceptions:. First. Other material of value may have been contained in the tank-age; as to that, the present record is not clear. Second. Instead of being, on its face and primarily, a contract for the purchase of these units, it was primarily a contract for the purchase of tons of tankage, and only at the option of the buyer could it be transformed into one for units of ammonia and phosphate. The material was to be shipped as tankage, invoiced as tankage, and paid for as tankage. The analysis which was to resolve the tankage into its units of value was not certain to occur, but was contingent upon the exercise of the buyer’s option that there should be an analysis. Whether the words “buyer’s. option” refer to the analysis or to the alternative chemists is immaterial because the phrase “analysis, if any,” of itself sufficiently imports that there should be one only if the buyer wished, for he was the sole party who could possibly be benefited thereby. When we thus construe the contract as one which did not automatically apply the stated test and measurement before fixing a final purchase price,, but which rather adopted a quantity measurement as the price criterion which should be followed until and unless one of the parties demanded the alternative method, it necessarily follows that the contract right to this option, which right carried no fixed time limit, must be exercised within a reasonable time. The determinative question, therefore, is whether the buyer, within a reasonable time, exercised this contract option. [4] 2. It is said that the question of reasonable time is, when the facts are undisputed, a question of law, and language to that effect is cited from Supreme Court opinions. Paine v. Central R. R. Co., 118 U. S. 152, 160, 6 Sup. Ct. 1019, 30 L. Ed. 193; Earnshaw v. U. S., 146 U. S. 60, 67, 13 Sup. Ct. 14, 36 L. Ed. 887. The statement is entirely accurate, if by “facts” we mean ultimate facts; but we think it inaccurate, if applied to evidential or probative facts from-which reasonable men may draw differing inferences; and the very [382] question as to how long a man may reasonably wait must often be one upon which mincjs may fairly differ. As applied to a situation of the general character here involved, there must be a minimum, delay within which the court can clearly say was, as matter of law, not unreasonable, and there must be a maximum, delay beyond which becomes unreasonable as matter of law; but between these limits, there is a field where the unreasonableness of the delay is either a question of fact or a mixed question of law and fact, so that its determination falls within the province of the jury. We take this statement of the rule to be a proper summary of the authorities (Long Bell Co. v. Stump [C. C. A. 8] 86 Fed. 574, 30 C. C. A. 260; Druse v. Wheeler, 26 Mich. 189, 200; note V, p. 341, 29 L. R. A., [N. S.]; note, p. 142, 4 L. R. A. [N. S.]); and for a discussion of the difference between ultimate facts and evidential facts see Kentucky Co. v. Hamilton (C. C. A. 6) 63 Fed. 93, 97, 11 C. C. A. 42. [5] 3. Upon the record now presented, we can safely say that the contract did not require analysis before paying the draft. Such inference cannot be drawn from the face of the contract, nor from the construction which the parties, in their course of business, put upon the contract, according to the pleadings and the offered proofs. The normal inferences are that a sight draft is to be paid on presentation, and that a draft and bill of lading sent by mail would reach Wilkes-barre and be presented and paid at least as soon as samples would reach Baltimore, and before samples sent to Baltimore could be analyzed and the results returned to Wilkesbarre. The second recited inference might not be safe, if the purchaser’s only protection had been by rejection, but the right to reclaim for the deficiency was expressly preserved, and this right may well apply to a subsequent reclamation rather than to a mere reduction from the payment to be made for the current shipment. Further, the careful provision that the buyer should not get possession except by paying the full invoice price, contrasted with the affirmative promise of a compensatory allowance, is persuasively inconsistent with the idea that paying the draft waived any reclamation. We do not think the parties intended that a draft should go dishonored and a car accumulate demurrage for days or weeks while they negotiated about a claimed deficiency. If it should appear that, owing to the nature of the material or some custom of trade familiar to the parties, rights would be prejudiced by allowing the option for analysis to survive the payment of the draft, the subject-matter of this paragraph might require further consideration; but upon this record we see no such prejudice. [6] 4. The last samples reached Baltimore October 19th, the corresponding drafts were paid October 31st, and the analyses were made November 7th. The delay was, therefore, 19 days, and the seller had been notified that the material was below grade. As to the remaining shipments, the greatest time elapsing between analysis and receipt of samples was 11 months; the shortest 40 days. Whether the delay in analysis of the last shipment (and indeed of all sent after the August complaint) was too great depends wholly, so far as this record in [383] dicates, upon the probability of material change in the samples. As to the earlier shipments, there is the further question whether the delay and seeming approval were likely to affect the seller’s conduct to his prejudice. We cannot say, as we are urged to do, that the latter result might not happen. If the seller had known after the first shipment or two that the tankage did not meet the standard, he' could, we would naturally assume, have reduced the moisture and so have avoided the payment of freight on water, ultimately to be charged back to him. It may be that he could have changed his process so as to have produced -more or lost less ammonia, and that, without disadvantage, he could have changed his raw material so as to have bettered his residual product. On the contrary, the previous years’ dealings, or some other consideration, may furnish justification for failing earlier to subject the tankage to the agreed test. We do not determine the force of these things; we are only illustrating that there is or may be a field of doubtful fact affecting the ultimate question of what delay was more than reasonable. 5. In all that we have said, we have assumed that the contract, with the aid of that expert knowledge and that familiarity with the trade customs which should be attributed to the parties, furnishes a means of ascertaining the “pro rate reduction” which it promises. On its face, it does not do this. The excess of water could be presumed to be worthless, and so that allowance could be computed; the other constituents, beyond ammonia and phosphate, may or may not have had value enough to justify the freight. If no, they furnish no difficulty to the computation; if yes, then with reference to them, as certainly with reference.to the phosphate and the ammonia, there must be expert aid in proportioning values. We have not hesitated to make this assumption, although not directly supported by the present record, because it seems improbable that the parties would have made a contract which was unintelligible to them. 6. Our conclusion that the contract itself required the exercise of its option by plaintiff within a reasonable time makes immaterial the question so much discussed by counsel whether the laws of Ohio or of Pennsylvania should control. There is no conflict. The meaning of the words “at destination” has not been argued or considered. Por the error in directing the verdict, the judgment must be reversed, with costs, and the case remanded for a new trial.