Edwards Mfg. Co. v. Bradford Co.

MAYER, Circuit Judge (after stating the facts as above). The trial court submitted three questions of fact to the jury (1) whether the contract with Suzuki & Co. was modified, (2) whether defendant had notice at the time of contracting with plaintiff that plaintiff had a then existing contract of sale to a Japanese customer, and (3) whether damages should be computed by taking the Suzuki contract on a long ton or a short ton basis. Daycock had died before the trial, and, although Hecht’s testimony in respect of questions (1) and (2) was uncontradicted, he was an interested witness, and, for that reason, the court submitted these questions to the jury. As the jury decided question (3) in favor of defendant, i. e., computed on the short ton basis, that feature has disappeared from the case. 1. It is first contended that the court should have sent to the jury the question as to whether Daycock had authority to make the contract evidenced by plaintiff’s Exhibits 2, 3, and 4. We have examined, not only the printed record, but as well the typewritten transcript (submitted by consent) of additional colloquy between court and counsel. Nowhere did counsel for defendant ask to go to the jury on this question, nor on the question as to whether, even if Daycock had not authority to bind defendant by the particular contract in question, nevertheless defendant’s conduct amounted to a ratification of the contract. At the end of all the discussion, the court concluded that the question of ratification was one of law, to be decided by the court and not by the jury, and that, as he decided the question of ratification in favor of plaintiff, the question as to Daycock’s authority did not require decision. It is sometimes said by those who, perhaps, have not given the subject careful thought that questions as to the effect of motions to dismiss or direct or of failure to ask to go to the jury are technicalities in the invidious sense. They are not such, but, on the contrary are the technique of law or practice made necessary in order to prevent, if possible, — 180 — repeated trials, and to make clear in jury cases what counsel contend are questions of law or of fact. In the interest of just disposition, the court and counsel are entitled to know by definite request whether or not counsel desires, questions to be submitted to the jury. We heed not set forth in detail the various motions made here by each party at the end of the case. It is enough to state that, at the close, of the whole case, plaintiff moved that the court direct a verdict in its favor, and that it leave with the jury no issues except the issue of the amount of damages dependent upon whether the contract with Suzuki & Co. called for long or short tons. The court denied defendant’s motion to dismiss the complaint, but did not fully grant plaintiff’s motion to direct a verdict as made; but, on the contrary, sent to the jury the three questions referred to supra., and itself decided the other questions. Defendant did not ask to. go to the jury on the question of authority of Daycock or on the question of ratification. [1] If' defendant had desired the court to submit to the jury any questions other than those which he did submit, it was the duty of the defendant either to ask the court to go to the jury upon all the issues of fact, or to request that certain specified issues be sent to the jury. Williams v. Vreeland, 250 U. S. 295, 298, 39 Sup. Ct. 438, 63 L. Ed. 989, 3 A. L. R. 1038; Fire Association of Philadelphia v. Mechlowitz (C. C. A.) 266 Fed. 322; Columbia Aid Association v. Sprague, 271 Fed. 381, 50 App. D. C. 307; Dounce v. Dow, 64 N. Y. 411; Brown Paint Co. v. Reinhardt, 210 N. Y. 162, 104 N. E. 124. [2] 2. But the case need not go off on a question of practice. Whether or not a contract has been ratified is sometimes a question of fact and sometimes one of law. The telegram- from Daycock to defendant that Daycock had closed with Hecht was dated November 22d. On the same day, Daycock’s letter and order memorandum went forward as did the letter of credit on November 23d. As a Sunday intervened, E. W. Edwards testified •that he received these on November 27th. t [3] If Daycock had exceeded his authority, it was defendant’s duty within a reasonable time (which in this case meant promptly) to notify ,plaintiff and return the letter of credit. Instead of this, all that Edwards did was to telegraph Daycock on November 27th, “Impossible to have rolled Hecht’s order without priority order. Government’s requirements won’t permit it,” and Daycock’s son testified that he read the substance of .this telegram to Hecht. On November 27th, Daycock telegraphed plaintiff that Hecht did not understand the meaning of “priority order,” and E. W. Edwards testified that after receiving this telegram he inquired of several mills, and they would not take an order at that time, and H. W. Edwards testified substantially to the same effect. Thus, on or about November 27th, defendant understood perfectly that it could not or would not carry out its contract, whether for one reason or another. If Daycock had not authority, and if the telephone conversation supra between Hecht and Edwards was as testified by Edwards, then all the morp necessary on the facts in this case to notify plaintiff prompt181 Jy that Daycock had no authority to make the contract. Silence, in the circumstances here disclosed, between November 27th and December 12th (IS days) when the contract period was soon to expire, constitutes ratification as matter of law. Johnson v. Jones, 4 Barb. 369; Foster v. Rockwell, 104 Mass. 167; Halloway v. Arkansas City Milling Co., 77 Kan. 76, 93 Pac. 577; 2 C. J. 505, 509; 31 Cyc. 1275. [4] But, in addition to the foregoing, another settled and salutary principle is applicable. The letter of December 10th did not place rejection on the ground of Daycock’s lack of authority. Indeed, the letter of the same date from plaintiff, per Edwards, to Daycock showed that the point of Daycock’s lack of authority was an anchor to windward, whose existence1 was not to be, made known to plaintiff until sometime before the “visit is' over.” But afterthoughts in litigations do not permit a party “to mend his hold,” as was quaintly but effectively said in Railway Co. v. McCarthy, 96 U. S. 258, 24 L. Ed. 693. See, also, Littlejohn v. Shaw, 159 N. Y. 188, 53 N. E. 810; Schuyler Countif v. Missouri Bridge Co., 256 Ill. 348, 100 N. E. 239. [5, 6] It is contended that the oral modification of the contract between plaintiff and Suzuki &i Co. was void under the statute of frauds, and that plaintiff could not have recovered against Suzuki & Co. Therefore, it is arg'ued that, as the basis of plaintiff’s recovery is that there was a binding resale contract, that basis is destroyed when it appears that plaintiff’s so-called modified contract was not enforceable; for it is urged that in such case the damages at once become uncertain and speculative, depending entirely on the caprice of the purchaser and other “unpredictable elements.” We need not determine what would have been the rights of Suzuki Sr. Co. as against plaintiff, had these two engaged in controversy in respect of the legal effect of the oral modification. The reason is that the defense of the statute of frauds is personal to the contracting parties — here plaintiff and Suzuki & Co. As the contract in the case at bar is a New York contract, we look to the New York statute, which no longer uses the word “void” (although, when the word “void” was used, see Crane v. Powell, 139 N. Y. 379, 384, 34 N. E. 91), but reads: “A contract to sell or a rale of any goods or dioses in action of the value of fifty dollars or upwards shall not be enforceable by action. * * ® ” Uniform Sales Act (Ar. X. Personal Property Law [Consol Laws, c. 41] § 85). The principle here concerned is well stated by Judge Speer in Purdom Naval Stores v. Western Union Telegraph Co. (C. C.) 153 Fed. 327, 330: “The statute merely states that ‘no action shall be brought.’ Failure to eomjfiy with its terms does not * * * render the contract void, but unenforceable. * * * It is besides true that the benefit of the statute of frauds as a defense is entirely personal, and cannot bo set up by third parties. * * * It follows that whether or not the statute was complied with by the parties to the proposed sale, that question cannot now be raised by the defendant company, which was no party to the transaction.” It is said by defendant that this is dictum, but, in any event, it states the principle applied to various states of facts in many cases. . — 182 — Perhaps the most striking case is Cahill v. Bigelow, 35 Mass. (18 Pick.) 369, in which the opinion was written by Chief Justice Shaw. In that case, the question was whether a trustee was obliged to set up the statute of frauds', and the court, after stating that “the effect of the statute is that the promisor, who would otherwise be liable to such an action, may avoid it,” concluded: “The trustee in effect declares his election, not to avail himself of the statute of frauds to avoid his parole undertaking to pay these .debts, but to pay them according to the original understanding between him and the other parties. * * *" See Moore v. Crawford, 130 U. S. 122, 129, 9 Sup. Ct. 447, 32 L. Ed. 878; Kemp v. National Bank of the Republic, 109 Fed. 48, 54, 48 C. C. A. 213; Rice v. Manley, 66 N. Y. 82; Cahill v. Bigelow, 35 Mass. (18 Pick.) 369; Hoffman v. Bank, 231 Mass. 324, 121 N. E. 15; Parish v. Railroad Co., 103 Miss. 288, 60 South. 322; Schulze v. Buckeye Lumber Co., 94 Wash. 520, 162 Pac. 588; 17 C. J. 794. In view of the foregoing, there is no merit in the argument that plaintiff was required to prove, in effect, that Suzuki & Co. would not interpose the defense that the oral modification of the contract avoided it; because the reasoning of these cases is that the contract is valid or at least not void and merely unenforceable at the option of the person against whom it'is sought to be enforced. [7] 3. At the conclusion of the case, the court was asked to “leave to the jury the question of whether or not the profits on the subcontract with Suzuki & Co. were reasonable profits under all the circumstances.” This request was denied and exception duly taken. Thus, there is presented the contention of defendant that, even though plaintiff be entitled to recover profits lost by reason of its inability to fill its resale or subcontract with Suzuki & Co., its recovery' in this respect must be limited to a reasonable profit, such as was customarily obtained at the time by persons dealing in steel sheets for export. In support of this proposition, defendant has cited, among others, the cases of Horn v. Midland Railway Co., 8 L. R. C. P. 131, and Guetzkow v. Andrews, 92 Wis. 214, 66 N. W. 119, 52 L. R. A. 209, 53 Am. St. Rep. 909, but before discussing these cases the facts in the case at bar should be briefly recapitulated. The verdict of the jury established that Hecht made fully known to Daycock (1) prior to November 22, 1917, i. e., prior to the contract, that plaintiff had an order for export of 30-gauge steel to Japan and (2) later, on November 21st or 22d that the customer from whom the order for the Far East had been taken by plaintiff was willing to accept 29 gauge. As evidenced by its letter to Daycock, dated November 16, 1917, defendant knew "at a time prior to the date of its contract with plaintiff that steel 36" wide was “very difficult to obtain,” and it also understood that Hecht would “pay a premium to get a quantity of 36x28x 72,” and it instructed Daycock “to try him out at about 6J4 cents per pound.” — 183 — The Horn Case was decided by a divided court. In that case, plain-tilts, in the beginning of the year 1871 contracted to supply at 4s. a pair a large quantity of shoes to Hickson & Co., who required them to fulfill a contract for the supply of the French army during the Franco-Prussian war. The last day of delivery by plaintiffs was February 3, 1872, and all shoes not so delivered would be thrown back on plaintiffs5 hands. Plaintiffs delivered a certain quantity of shoes to the railway company consigned to Hickson & Co. in London in time lo be delivered on February 3, 1872. Notice was given to the station master that plaintiffs were under contract to deliver on that date, and, if not so delivered, the shoes would be thrown on plaintiffs’ hands; but no further information was given to defendant. The shoes were not delivered in time and were rejected. Plaintiffs could only sell the rejected shoes at 2s. 9d. a pair, and in consequence of the cessation of the war the consignees for their French contract could not have sold them at a higher price even if duly delivered. Defendants paid into court an amount which was sufficient to cover the ordinary damages to which plaintiffs would be entitled; but plaintiffs claimed to be entitled to recover the difference between 4s. and 2s. 9d. a pair. There was some discussion as to the distinction between the damage liability of a common carrier compelled to accept the transportation of goods and that of one voluntarily making a contract, but we think it unnecessary to consider that question. The marked difference between the Horn Case and that at bar is that, in the Horn Case, the information conveyed to the carrier did not indicate any special circumstances, except the time of delivery, and did not make known that there was a contract for sale in France which necessitated transshipment to that destination; while, in the case at bar, it was made entirely clear that the steel was for export in war time to a Japanese customer. In Booth v. Spuyten Duyvil Rolling Mill Co., 60 N. Y. 487, the court, per Church, Ch. J., said, at page 494: “But the mere circumstance that the vendor does not know the precise price specified in the coulrad will not exonerate him entirely. He cannot, in any ease, know the precise market price at the time for performance. Knowledge of the amount of damages is impracticable, and is not requisite. It is only requisite that the parties should have such a knowledge of special circumstances, «fleeting the question of damages, as that it may be fairly inferred that they contemplated a particular rule or standard for estimating them, and entered into the contract upon that basis.'’ A.s early as November 16, 1917, defendant knew that plaintiff was in the market for this kind of merchandise. It also knew that steel of this character was difficult to obtain and, as disclosed by the record, it must have known that the price of such a commodity, in war time, had been and likely would be subject to variations. The government of the United States did not fix prices until November 5, 1917, and on September 6th, the day that plaintiff entered into its contract with Suzuki & Co., the market price for 28 gauge steel was 8 to 9 cents, as shown by “The American Metal Market and Daily Iron and Steel Report.” The uncontradicted evidence shows that with certain premiums the 30 gauge steel originally contracted for by plaintiff with Suzuki & Co. had a market value of about 9 cents. — 184 — Where there is a subcontract, it may he, in some circumstances, that a defaulting party should not be held for extravagant or exceptional damages. The question is not whether the difference between the Suzuki & Co. contract with plaintiff for 10 .cents and the contract between plaintiff and defendant for 6 cents represented a reasonable profit, where special circumstances are made known. At most, it is whether the price fixed by the subcontract is such that it can be characterized as extravagant or exceptional. Whether other persons then trading in the market made more or less profit is not to the point. A profit of' 1 cent on 9 cents, which is less than 12 per cent., cannot, in the circumstances shown in this record, be held to be an unreasonable profit; and what is reasonable is, in this, case, as in most cases, a question of law. Earnshaw v. United States, 146 U. S. 60, 67, 13 Sup. Ct. 14, 36 L. Ed. 887; In re B. & R. Glove Corp. (C. C. A.) 279 Fed. 372, and Agnello v. United States (C. C. A.) 290 Fed. 671. When plaintiff made its contract with Suzuki & Co., it ran all the risk of the market. If the price of steel had gone up, it would have lost money and, of course, as the price of steel went down, largely due to fixation of price by the government, it was in a position to make a profit. In addition to the foregoing it appeared from the testimony of Gausden, an expert witness for defendant, that the last sale of steel of this kind made by him was in August, 1917, and that he did not know of any person who in December, 1917, had on hand the necessary steel of this description. Alexander, another expert witness for defendant, knew of no one who on December 10th had or could have obtained the necessary steel for delivery by December 31st, and, indeed, the evidence is uncontradicted that there was no market value for this steel from on or about December 10th for delivery on December 31st, for the very good reason that such steel was not obtainable. Further there was no evidence that such steel was obtainable on or after November 22d, although there were some general statements by Alexander, but no specific instances which he could point out, where such steel could be procured for delivery by December 31st; and the evidence above referred to of the two Messrs. Edwards shows that they were unable, after all their efforts, to procure this steel for delivery at the agreed date. Thus, in addition to the information given by Hecht to defendant, it was well known to defendant that the steel was not readily obtainable in the market, and the defendant knew, as alleged in its answer, that “said goods, because of the unusual width of the sheets, had to be specially manufactured by defendant, and were not standard, and were not readily obtainable in the market, * * * ” and defendant cannot now avoid the consequences of its answer, even though it offered no proof in support of its allegations. Paige v. Willet, 38 N. Y. 28, 31. The result is that the case is one of special circumstances, which brings it within Booth v. Spuyten Duyvil Rolling Mill Co., supra, and the Northern Pacific Railway Co. v. American Trading Co., 195 U. S. 439, 25 Sup. Ct. 84, 49 L. Ed. 269. While both sides find comfort in the Booth Case, it is plain that the views there expressed lean, on — 185 — these facts, to the conclusion here stated. While the question here involved seems not to have been discussed in the Northern Pacific Railway Co. Case, supra, the result there was the same as that attained by plaintiff in the case at bar in the verdict below. In Guetzkow v. Andrews, 92 Wis. 214, 66 N. W. 119, 52 L. R. A. 209, 53 Am. St. Rep. 909, the case involved no question of the failure ■of vendor to deliver goods which he had promised, and of the resultant inability of vendee to deliver on his own subcontract. Defendant in that case claimed that, by reason of certain defects, it lost profits amounting to from 100 to 150 per cent, on the value of the amount which otherwise it would have gained by selling them to exhibitors at the World’s Pair. The claim, therefore, was not for damages for breach of an executory contract of sale, but for breach of warranty in connection with an executed sale. The court confined its conclusion to the “precise question here presented,” and, in so far as the court-discussed the rule applicable to executory contracts, its views were the same as those which plaintiff here advances. Wc have not overlooked our own case of Mitsubishi Shoji Kaisha v. Davis (C. C. A.) 291 Fed. 57, certiorari denied -, U. S. -, 44 Sup. Ct. 34, 68 L. Ed. -. In that case we held that the notice to the carrier was wholly insufficient to charge it with knowledge of special damages plaintiff might sustain by delay or loss in transit. But, in the case at bar, we are of opinion that the record shows without dispute that the special circumstances of the contract between plaintiff and Suzuki & Co. were made known to defendant, and, as we have stated supra, and as is fully discussed in the Booth Case, it was not necessary for plaintiff to communicate to defendant the price of its subcontract. The result is that the court below did not err. We have considered the other questions referred to in the able briefs of counsel, but they were rightly decided below, and do not call for discussion. Judgment affirmed. Footnotes [1] (gz^For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes [2] ©3s>For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes