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Docket Number

No. 13770

Attorney(S)

Jordan Burke, for plaintiff in error. R.H. Stanley, for defendants in error.

Judges

. Opinion by RAY, C.

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Smart Summary

Marshall v. Miller et al., No. 13770 (Supreme Court of Oklahoma, Sept. 30, 1924; rehearing denied Nov. 18, 1924)

Factual and Procedural Background

This is an appeal by plaintiff Nat Marshall from a judgment for defendants N.F. Miller et al., rendered in the District Court of Choctaw County (E.F. Lester, Assigned Judge). Plaintiff sued on an oral contract allegedly made November 10, 1920, under which plaintiff agreed to sell and defendants agreed to buy 300 bales of cotton, "middling and better," at 20 1/4 cents per pound, f.o.b. compress at Hugo, to be paid for by defendants upon delivery.

The petition alleged that 300 bales were delivered at the compress at Hugo, that defendants accepted and paid for 239 bales, but refused to accept and pay for 61 bales, causing plaintiff damage in the sum of $3,694.37. Defendants answered with a general denial and asserted additional factual matters: that plaintiff guaranteed the cotton to be equal in grade and staple to 50 bales then at the compress which defendants had examined; that delivery was to be made f.o.b. at Hugo within 10 days; that price movements and communications between the parties resulted in shipments subject to inspection; that defendants disposed of received cotton and paid for what they accepted; and that they refused 61 bales because of inadequate staple. Plaintiff replied by general denial.

At trial the court gave jury instructions (numbered 5 and 9) that told the jury time was of the essence of the contract and that the contract was abrogated if plaintiff failed to deliver within the ten days, unless defendants waived or extended the time. The Supreme Court reversed the judgment, holding those instructions erroneous and prejudicial, and directed the trial court to vacate the judgment and grant a new trial.

Legal Issues Presented

Whether, as a matter of law based on the pleadings and evidence in this case, time was "of the essence" of the parties' oral contract for the sale of cotton.
Whether the trial court erred in instructing the jury that time was of the essence and that the contract was abrogated if plaintiff failed to deliver within the ten-day limit, absent a finding that defendants waived or extended the time.

Arguments of the Parties

Plaintiff's Arguments

The opinion reports that plaintiff's pleading alleged performance: that the 300 bales were delivered to the compress at Hugo and that defendants accepted and paid for 239 bales while refusing 61 bales, thereby entitling plaintiff to recovery for the refused bales. Beyond those allegations and a general denial to the defendants' answer, the opinion records no detailed affirmative trial argument by plaintiff other than the general contention that the defendants wrongfully refused 61 bales.

Defendants' Arguments

Defendants pleaded that the contract included a guarantee that all cotton to be shipped would be equal in grade and staple to 50 bales they had examined, and that delivery was to be made f.o.b. compress at Hugo within ten days.
They alleged price changes and communications leading to shipments "subject to inspection"; they maintained plaintiff shipped cotton not equal in grade or staple to the examined 50 bales; they notified plaintiff of the defect; they disposed of cotton for plaintiff except 61 bales which they refused because of short staple; and they paid for what they accepted.
Defendants also asserted that at the time of the original contract they had an existing contract to sell cotton which constrained the time they could allow for delivery, and they contended plaintiff failed both as to time and the guarantee of quality.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Section 5061, Comp. Stat. 1921	"Time is never considered as of the essence of a contract, unless by its terms expressly so provided."	The court applied the statute as a controlling legal standard to conclude that time is not the essence absent an express provision; because the contract and evidence did not expressly make time of the essence, the trial court's instruction that time was of the essence was erroneous.
Shenners v. Adams, 46 Okla. 368, 148 P. 1023	Explains that, under the statute, "before time shall be the essence of a contract, it must be expressly stipulated therein" and that the requirement must appear "from the plainly expressed provisions of the contract."	The court relied on this case to emphasize that an express stipulation in the contract (or plainly expressed provisions) was required before treating time as the essence — and found no such expression in the present record.
Standard Lumber Co. v. Miller Vidor Lbr. Co., 21 Okla. 617, 96 P. 761	Affirms the same principle that time is not of the essence without express contractual provision.	The court cited this case among others to support the general rule applied to the facts here.
Snyder v. Stribling, 18 Okla. 168, 89 P. 222	Affirms the requirement that time be expressly made the essence to have that effect.	Used as additional authority for the proposition applied to reverse the judgment based on improper instructions.
Jackson v. Twin State Oil Co., 95 Okla. 96, 218 P. 325	Also cited for the same rule regarding time as the essence of a contract.	Relied upon as a supporting precedent in concluding the trial court erred in its time-as-of-the-essence instructions.

Court's Reasoning and Analysis

The court identified as the critical legal error the trial court's instructions numbered 5 and 9, which told the jury that "time was of the essence of the contract" and that the contract was abrogated if plaintiff failed to deliver within ten days unless defendants waived or extended the time.

The court then applied the text of Section 5061, Comp. Stat. 1921: "Time is never considered as of the essence of a contract, unless by its terms expressly so provided." It explained, citing Shenners v. Adams and other Oklahoma authorities, that before time may be treated as the essence of a contract it must appear from the plainly expressed provisions of the contract (or an equivalent explicit stipulation) that the parties so intended.

Turning to the record, the court found no evidence that the parties understood time to be of the essence. Both parties agreed on price, quantity, and that the cotton was to be middling or above; they differed only on whether plaintiff guaranteed staple to match the 50 bales examined. The factual account showed defendants accepted and paid for 239 bales after the ten-day limit had expired (acceptances on November 23, 29, and December 10), and that the defendants refused the remaining 61 bales on the asserted ground of short staple. One defendant expressly testified the refusal was "Because it was short staple and we couldn't deliver it on contract." Neither party testified that time was to be of the essence, nor that the refusal of the 61 bales was due to late delivery.

Given the statutory rule and the authorities cited, together with the conduct of the parties (accepting and paying for a large portion of the cotton after the contractual time limit and refusing on quality grounds), the court concluded the instructions making time of the essence were unsupported by the contract terms or the evidence and were therefore erroneous. Because these erroneous instructions were prejudicial to plaintiff's rights, the court determined that reversal was required.

Holding and Implications

Holding: The Supreme Court of Oklahoma reversed the trial court's judgment, holding that the instructions which characterized time as the essence of the contract (instructions 5 and 9) were erroneous and prejudicial, and directed the trial court to vacate the judgment and grant plaintiff a new trial.

Implications: The direct effect is that the judgment for defendants is vacated and the case is remanded for a new trial. The opinion rests on application of existing statutory and case law requiring an express contractual stipulation before time may be deemed the essence; the court did not announce a new legal rule beyond applying those authorities to the facts of this case.

Opinion by Ray, C.; Syllabus summarized by the court; judgment reversed and new trial ordered.

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MARSHALL v. MILLER et al.

1. Contracts — Time as of Essence.

Time will not be considered as the essence of a contract unless it is made to appear from the plainly expressed provisions of the contract that such was the intention of the parties.

2. Same — Erroneous Instruction.

There being no evidence that the parties considered time as an essential part of the contract, it was error to instruct the jury that time was of its essence and that they should find for the defendant unless they further found that defendant waived delivery within the time for delivery fixed in the contract, or extended the time.

(Syllabus by Ray, C.) Commissioners' Opinion, Division No. 1.

. Opinion by RAY, C.

The judgment must be reversed because of the following instructions to the jury:

"(5) The court instructs the jury that time was of the essence of the contract in this case, unless you further believe and find from the evidence that the time was extended by the defendants in this case, and unless you believe and find from the evidence that the defendants extended the time your verdict should be for the defendants.

"(9) You are instructed that if you find and believe from the evidence in this case that the plaintiff and defendant entered into a contract for the purchase and sale of 300 bales of cotton of a certain quality and kind to be delivered within ten days at Hugo, Okla. at compress, and that the plaintiff failed to deliver said cotton within ten days thereof, then in that event the contract was abrogated by the plaintiff, unless you further find from the evidence that the defendant waived said delivery within said ten days or extended the time of the delivery of the same."

There was nothing in the pleading or the evidence to justify these instructions. Plaintiff sued on an oral contract alleged to have been entered into by and between the plaintiff and defendants on the 10th day of November, 1920, whereby plaintiff agreed to sell to defendants, and defendants agreed to buy from plaintiff, 300 bales of cotton, middling and better, at 20 1-4 cents per pound, f. o. b. compress at Hugo, to be paid for by defendants upon delivery. It was alleged that the 300 bales were so delivered at the compress at Hugo, and that the defendants accepted and paid for 239 bales, but refused to accept and pay for the 61 bales to plaintiffs' damage in the sum of $3,694.37.

Defendants answered, first, by general denial, and by paragraph 2 of the answer set out the terms of the contract, the same, in substance, as alleged in the petition, except that it was alleged that plaintiff guaranteed all the cotton to be equal in grade and staple to 50 bales then at the compress, which the defendants had examined, and that it was to be delivered f. o. b. compress at Hugo within 10 days. It was further alleged in the answer that immediately after the contract was entered into the price of cotton advanced, and that plaintiff repudiated his contract, that thereafter the price of cotton declined, and the defendants in a telephone conversation between the parties authorized the plaintiff to ship the cotton subject to their inspection, if he so desired, within the time limit of 10 days from the 10th day of November, 1920, that thereafter plaintiff shipped a portion of the cotton from Tuskahoma to Hugo, but that it was not of the grade or staple of the 50 bales examined by the defendants, and thereupon the defendants, notified plaintiff of such fact, that thereafter the plaintiff requested the defendants to dispose of the cotton for him to the best advantage, and that they did dispose of all but 61 bales, and that the plaintiff thereafter offered to buy in for the defendants enough of the required quality to make out the 300 bales, but defendants declined to accept the offer; that at the time of the original oral contract the defendants had a contract to sell the cotton and could only give a limited time to the plaintiff within which to deliver such cotton as they would buy from them, that plaintiff failed both in point of time and his guarantee of quality, that at the time the cotton was shipped by plaintiff to Hugo there was no contract between the parties, and that the cotton was shipped subject to the inspection of the defendants, that the defendants had paid for all of the cotton they accepted, and were not liable for any sum for the 61 bales refused by them. To this answer plaintiff replied, by general denial.

It is disclosed by the evidence that plaintiff and defendants were in agreement as to the terms of the contract of sale in every particular except that the defendants testified that the plaintiff guaranteed all the cotton to be shipped, after the contract was made, to be equal in grade and staple to the 50 bales which the defendant had examined, while the plaintiff testified that there was nothing said about the staple. They were in agreement as to the number of bales to be delivered f. o. b. compress at Hugo, the price to be paid, and that all the cotton was to be middling or above. They also agreed that 150 bales were at the compress at Hugo at the time the sale was made, and that 160 bales were delivered to the compress at Hugo on the 22nd and 23rd days of November. That was two and three days after the time limit fixed in the contract. None of the cotton was accepted or paid for within the 10-day limit fixed by the contract. The 10-day limit expired November 20, 1920, November 23, the defendants accepted and paid for 100 bales. November 29, they accepted and paid for 66 bales, and December 10 they accepted and paid for 73 bales, but refused to accept or pay for the 61 bales for the reason that the staple did not come up to the staple of the 50 bales which they had examined before the contract was made.

F.W. Miller, one of the defendants, on direct examination, was asked this question. "Why did you refuse to take it?" (referring to the 61 bales), to which he answered. "Because it was short staple and we couldn't deliver it on contract." Both of the defendants testified in the case and neither testified that it was the understanding that time was of the essence of the contract. Neither testified that the 61 bales were refused because not delivered within the time limit fixed in the contract. Section 5061, Comp. Stat. 1921, is as follows:

"Time is never considered as of the essence of a contract, unless by its terms expressly so provided."

In the case of Shenners v. Adams. 46 Okla. 368, 148 P. 1023, it is said:

"Under the above section, before time shall be the essence of a contract, it must be expressly stipulated therein. We do not base this case solely on the ironclad proposition expressed by the language of the statute, and are fully aware that no particular form of expression is necessary; but it must appear from the plainly expressed provisions of the contract, independent of all extraneous matters or circumstances, that it was the intention of the parties thereto that time should be the essence of the contract."

To the same effect, Standard Lumber Co. v. Miller Vidor Lbr. Co., 21 Okla. 617, 96 P. 761; Snyder v. Stribling, 18 Okla. 168, 89 P. 222; Jackson v. Twin State Oil Co., 95 Okla. 96, 218 P. 325.

There was nothing in the evidence to indicate that either plaintiff or defendants understood that time was of the essence of the contract, and the conduct of the defendants in accepting 239 bales after the time limit fixed in the contract had expired, and their refusal to accept the 61 bales upon the sole ground that the staple did not come up to that of the 50 bales previously examined, would indicate to the contrary.

We think the giving of these instructions, 5 and 9, was error prejudicial to the rights of the plaintiff. The judgment should be reversed with directions to vacate the judgment and grant plaintiff a new trial.

By the Court: It is so ordered.

MARSHALL v. MILLER