GARFIELD, C. COAL CO. v. PENN. COAL, C. CO

Contract, Construction, Performance and breach. Evidence, Extrinsic affecting writings, Admitted without objection, Admissions and confessions. Waiver. Practice, Civil, Rulings and instructions. Agency, Authority to make admissions. Corporations. Damages.

A contract in writing for the sale and delivery of coal began as follows: "We have this day sold you fifty thousand tons bituminous coal to be shipped as follows: twenty five hundred tons per month from September 1, 1902, until April 1, 1903, at price of $2.80 per gross ton . . ., balance of tonnage, about thirty two thousand five hundred tons, to be shipped in about equal proportions between April 1 and September 1, 1903, at the price of $2.60 per gross ton." A subsequent provision was as follows: "Should we fail to ship to you the full tonnage due to you from September 1, 1902, to April 1, 1903, in about equal monthly quotas, we authorize you to go into the open market and buy any balance unshipped, sending us bill for the difference in price, if any." Held, that by this agreement the seller was bound to ship at least twenty-five hundred tons of coal in each month from September 1, 1902, to April 1, 1903; that the words "in about equal monthly quotas" as used in the clause providing a mode for the assessment of damages could not control the express stipulation with which the contract opened, the clause being inserted, not for the purpose of defining the obligation of the seller as to shipments, but to provide a ready means of settling the damages in case of a breach of the contract, and that the utmost effect that could be given to the words "in about equal monthly quotas" would be to treat them as giving the seller liberty to ship somewhat more than twenty-five hundred tons in any particular month.

In an action for the alleged breach of a contract in writing for the sale and shipment of a certain amount of coal in each month during a period named, the correspondence and negotiations of the parties before the making of the contract may be competent, under the circumstances of the particular case, as an aid in construing the language in which the parties finally embodied their agreement, by enabling the court to understand the subject matter of the contract as it lay in the minds of the parties and thus to determine the meaning which they put upon any doubtful or ambiguous terms they may have used; but merely tentative offers made by either party while they were endeavoring to reach an agreement cannot control the plain meaning of their contract as finally concluded.

In an action for damages incurred by reason of the alleged failure of the defendant to deliver coal to the plaintiff at the times and in the amounts required by the terms of a contract in writing, under which the defendant was bound to ship to the plaintiff at least twenty-five hundred tons of coal "f.o.b. vessel" at a port named in each month during a period named, where it appeared that there was no storage for coal on the piers from which the coal was shipped, that a vessel arriving for coal anchored in the stream to await her turn to load, that when she took her place at the piers the coal was dumped into her from the railroad cars which brought it from the mines, that when the vessel was loaded she left the piers, and the coal, then and not before, was billed by the defendant to the plaintiff, it was held, supporting the findings and rulings of an auditor as adopted by the trial judge, that the meaning of the contract was that the defendant should place twenty-five hundred tons of coal each month on vessels to be furnished by the plaintiff, so that the vessel or vessels during the month could sail for their destination with at least twenty-five hundred tons, that it was the duty of the plaintiff to furnish each month vessels capable of carrying the twenty-five hundred tons, and that a failure to do so would excuse the defendant, that, if the plaintiff in any month sent a vessel capable of carrying more than twenty-five hundred tons, the defendant's obligation for that month ceased upon its loading the twenty-five hundred tons into the vessel during the month, and, if the plaintiff saw fit to hold the vessel over for a full cargo, it could not show any breach of the defendant's contract for that month, but that the dates of the respective shipments were the dates when the vessels were loaded and ready to sail and were not the dates when portions of the coal were dumped into a vessel from time to time before she was loaded sufficiently to be ready to sail.

In an action for damages incurred by reason of the alleged failure of the defendant to deliver coal to the plaintiff at the times and in the amounts required by the terms of a contract in writing which contained a clause making the delivery of coal subject to causes beyond the defendant's control, if it appears that the defendant failed to make the deliveries at the times required by the contract but afterwards shipped substantially all the coal stipulated for and that the plaintiff received and paid for it without any reservation or claim for damages on account of delay, and made statements of satisfaction with the conduct of the defendant, this does not constitute, as matter of law, a waiver of the plaintiff's claim for damages for breach of contract if it also appears that the acts and statements of the plaintiff, relied on to show a waiver, were done and made when the plaintiff supposed that the defendant unavoidably had been prevented by a scarcity of coal from making its deliveries more promptly, and when the plaintiff was ignorant of the fact, afterward discovered by it, that during the period in which the defendant failed to make the deliveries of coal to the plaintiff called for by the contract it was making deliveries to other persons, which it was not under obligation to make, of coal more than sufficient in amount to comply with the requirements of the contract.

Where a seller has agreed to deliver goods in specified amounts at certain times, and fails to comply with the terms of his contract as to the times at which the specified amounts shall be delivered, but ultimately delivers all the goods stipulated for by the contract, the buyer by taking what he can get under the contract when he can get it does not necessarily, as matter of law, waive his claim for damages for a failure to make the deliveries at the agreed times and in the agreed quantities.

The proprietor of a coal mine agreed in writing with a coal merchant to ship to him at a price named twenty-five hundred tons of coal in each month from September 1, 1902, until April 1, 1903. The contract contained the following provision: "Should we fail to ship you the full tonnage due you from September 1, 1902, to April 1, 1903, in about equal monthly quotas, we authorize you to go out into the open market and buy any balance unshipped, sending us the bill for the difference in price, if any." Held, that the provision quoted was inserted for the benefit of the buyer and gave him a privilege to be exercised at his option, and was not provided as the exclusive means for ascertaining or liquidating the buyer's damages in case of a failure of the seller to ship the required amount of coal in each month during the period named, so that, in case of such a breach of the contract by the seller, the buyer did not waive his claim for damages by failing to buy coal to fill the deficiencies and sending bills to the seller for the difference in price.

In an action by a coal dealer against the owner of mines of bituminous coal for the alleged breach of a contract in writing for the sale and shipment of a certain amount of coal in each month during a period named, it appeared that there were printed at the head of the paper on which the contract was written the words "Sales subject to strikes, accident or causes beyond our control." In the body of the contract were the words "in case of strikes at the mines then such portion as should have been shipped during that period is to be cancelled." During the period in which the deliveries were required there was a strike in anthracite coal mines which seriously affected the coal business in regard to bituminous as well as to anthracite coal. The judge ruled that the words "Sales subject to strikes, accident or causes beyond our control" at the head of the paper formed a part of the contract, and added "but the word `strikes' means strikes at the defendant's mines." The judge refused a request of the defendant to rule that "Upon the evidence at the time of making the contract there was an established custom in the coal trade in Pennsylvania that all sales were subject to strikes, accident, and causes beyond the control of the seller." The judge, however, did rule that "Upon the evidence the delivery of coal by the defendant under its contract was subject to strikes, accident, and causes beyond its control," although he found as a fact that the defendant did not bring itself within the terms of the request. Held, that the ruling last quoted and the finding of fact by the judge, made it unnecessary to pass upon the judge's ruling that the word "strikes," in the sentence at the head of the paper meant strikes at the defendant's mines or upon his refusal to make the ruling requested in regard to the existence of the alleged custom, as the defendant could not have been aggrieved by this ruling and refusal to rule whether they were correct or not.

In an action by a coal dealer against the owner of coal mines for the alleged breach of a contract in writing for the sale and shipment of a certain amount of coal in each month during a period named, the contract containing a clause making the deliveries of coal subject to strikes, accident and causes beyond the control of the defendant, the trial judge ruled in substance that the defendant would not be liable for deficiencies on its part which were due to a strike or a shortage of cars or other causes beyond its own control, if under the circumstances it had treated the plaintiff fairly and ratably with reference to the various other parties with whom it was dealing, and that the defendant was not bound under the terms of the agreement to deliver to the plaintiff the whole amount of its order to the exclusion of other customers entitled to receive coal under contracts with the defendant. The judge added the following: "But when the defendant was in default to the plaintiff, or when it became reasonably apparent to the defendant that it could not supply the coal called for under its contract with the plaintiff, it could not then enter into new obligations and rely upon deliveries of coal in fulfilment of such obligations to support its defense that its default to the plaintiff arose from causes beyond its control." Held, that the general ruling was correct, and that the additional ruling also was correct.

Where at a trial relevant evidence has been admitted without objection it has become a part of the case even if it might have been excluded upon objection.

If the president of a corporation, who is its chief executive officer, makes a statement in a letter, written by him in his official capacity in conducting the business of the corporation, upon a matter which naturally would be within his personal knowledge, his statement is admissible in evidence in an action against the corporation in which the statement is relevant as an admission of the defendant.

In an action for the alleged breach of a contract in writing for the sale and shipment at a port named of a certain amount of coal in each month during a specified period, where it is admitted by the defendant that the plaintiff was bound to have vessels at certain piers at the times when the defendant ought to have delivered the coal, if it appears that the defendant did not supply coal for these vessels to the extent and at the times required by the contract, the plaintiff is entitled to recover as an element of his damages any payments for demurrage, incurred by him under reasonable contracts with the owners of vessels, which are found to have been a direct and natural consequence of the defendant's failure to furnish the coal on time.

SHELDON, J.

We are of opinion that the contract in suit called for a shipment of twenty-five hundred tons of coal per month from September 1, 1902, to April 1, 1903. The express language of the defendant's agreement was that the shipments of coal were to be "2500 tons per month" during that time, at a price of $2.80 per ton; and this is followed by the stipulation that the remainder of the coal should be shipped "in about equal monthly proportions" during the remainder of the period stated, at a lower price. The contract made a clear distinction between the absolute engagement for the shipment of a fixed quantity during the first months of the time provided for and the qualified stipulation for subsequent shipments "in about equal monthly proportions," although each part of the undertaking was made subject to strikes, etc. The subsequent stipulation providing a mode for the assessment of damages if shipments were not made in "about equal monthly quotas," cannot control the express stipulation with which the contract opens. This latter clause was inserted, not for the purpose of defining the obligation assumed by the defendant, but to provide a ready means of settling the damages and making a resort to litigation unnecessary if the defendants should fail to ship in about equal monthly quotas the amount stipulated for during the first period. The utmost effect that can be given to the words "in about equal monthly quotas" in this clause is to treat them as giving to the defendant liberty to ship somewhat more than twenty-five hundred tons in any particular month. This was the construction of the contract adopted by the learned judge of the Superior Court before whom the case was tried; and it was correct. The defendant was in default for a failure to ship the stipulated amount of twenty-five hundred tons during any one of these months, and would be liable therefor in damages unless there was some legal excuse for such default.

The correspondence and negotiations between the parties before the making of the contract were indeed competent under the circumstances of the case as an aid in construing the language in which they finally embodied their contract. Smith v. Vose Sons Piano Co. 194 Mass. 193. United States v. Bethlehem Steel Co. 205 U.S. 105. But it remains true, as was stated in both of these cases, that this evidence is received, not to frame a new contract between the parties, but to enable the court to understand the subject matter of the agreement as it lay in their minds, and to determine the meaning which they themselves put upon any doubtful or ambiguous terms which may have been used, and so to apply their language correctly to the subject matter which was in their contemplation. Merely tentative offers made by either party while they were endeavoring to reach an agreement cannot control the plain meaning of the contract which they finally concluded.

Accordingly the defendant's first and second requests for rulings were rightly refused.

The judge refused to give the defendant's fourth and fifth requests, but did rule that the defendant was not bound to load more than twenty-five hundred tons per month upon any vessel or vessels which the plaintiffs might furnish. The coal was all actually shipped at Greenwich Piers in Philadelphia, in accordance with the option given in the contract. The facts found by the auditor and the rulings made by him, which were substantially adopted by the judge, were as follows: "Was the date when the coal was put on the vessel at Greenwich Piers the date of shipment? Greenwich Piers is a shipping point for coal, and is located on the Delaware River in Philadelphia. There is no storage for coal on the piers, and the method of loading vessels is briefly as follows: A vessel arriving for coal anchors in the stream to await her turn to load. As soon as opportunity offers, she takes her place at the piers and the coal is dumped into her from the railroad cars which have brought it from the mines. When the vessel is loaded, the coal is billed to the consignee, and the vessel leaves the piers. This method was followed by the defendant in the present case. The plaintiff was bound to furnish vessels for the coal which the defendant had contracted to ship, and, when coal was dumped by the defendant into the plaintiff's vessel, a delivery of coal was made. I am not, however, able to find, in accordance with the defendant's claim, that the date of dumping the coal was the date of shipment. If this were so, then the dumping of a hundred tons of coal in October into a twenty-five hundred ton vessel which was not loaded until some time in November would constitute an October shipment of coal. The intention and clear meaning of the contract was that the defendant should place twenty-five hundred tons of coal each month on vessels to be furnished by the plaintiff, so that the vessel or vessels could, during the month, sail for their destination with at least twenty-five hundred tons. It was the plaintiffs duty to furnish each month vessels capable of carrying the twenty-five hundred tons, and failure to do so would excuse the defendant. On the other hand, if the plaintiff, in any one month, sent a vessel capable of carrying more than twenty-five hundred tons, the defendant's obligation for that month ceased upon its loading twenty-five hundred tons into such vessel during the month. If the plaintiff saw fit to hold the vessel over for a full cargo, it could not afterwards claim as to that month that the defendant had failed to live up to its obligations. The defendant billed no coal to the plaintiff until the vessels were loaded and ready to sail. I find, in accordance with what was evidently the understanding of both parties, that the date when the vessels were loaded and ready to sail was the date of the shipment."

Undoubtedly the defendant is right in its contention that the general rule is that goods are shipped when they are put on board of the vessel or vehicle in which they are to be carried, and that an agreement to deliver goods previously unascertained free on board of a vessel or other vehicle of transportation is satisfied and the title passes to the purchaser and the goods are at his risk when the proper goods are actually loaded on board for shipment. The cases cited by the defendant's counsel fully support this general doctrine. Bowes v. Shand, 2 App. Cas. 455. Ex parte Rosevear China Clay Co. 11 Ch. D. 560, 569. Brown v. Hare, 4 H. N. 822, 829. Mora y Ledon v. Havemeyer, 121 N.Y. 179. Congdon v. Kendall, 53 Neb. 282. Clark v. Lindsay, 19 Mont. 1. But in these decisions the courts were dealing with cases in which all the goods that then were to be shipped had been delivered on board of the cars or vessels, and the seller had done all that he could do to secure the dispatch of all the goods that he was bound then to deliver. A very different state of affairs would have been presented if in Mora y Ledon v. Havemeyer, ubi supra, for example, the plaintiffs had seasonably put on board of the vessel only a portion of the quantity of sugar which they had agreed to deliver within thirty days; and a like statement may be made of the other cases above cited. Here, it was the duty of the plaintiff to furnish vessels of sufficient capacity to carry the coal which the defendant was to ship, and the defendant was under obligation to ship upon such vessels the stipulated amount of coal. No vessel could depart until it had on board a sufficient amount of coal, and it was the defendant's duty to furnish such amount for each vessel, subject to the limitation that it was not bound to ship more than twenty-five hundred tons in any one month. Upon the facts found, there was no error in the rulings made upon this subject.

Nor was the judge bound to rule that the plaintiff as matter of law had waived either its right to require the shipment of coal in the amounts and at the times called for by the contract, or its right to claim damages for the defendant's failure to make such shipments. The testimony of Spring, the plaintiff's vice president and buyer, and the fact that the defendant had finally shipped substantially all the coal stipulated for, and Mitchell's testimony that the plaintiff had received and paid for all this coal without any reservation or claim for damages on account of delay, undoubtedly furnished some evidence to sustain this contention of the defendant. Blodgett v. Foster, 120 Mich. 392. National Contracting Co. v. Vulcanite Portland Cement Co. 192 Mass. 247. Merrimack Manuf. Co. v. Quintard, 107 Mass. 127. But there was evidence that the plaintiff's statements of satisfaction with the conduct of the defendant, and its acts bearing in the same direction, were made and performed in ignorance of what was afterwards discovered to have been unfair treatment of the plaintiff by the defendant and an unjustifiable failure of the defendant to make shipments which it was fairly able to make and ought to have made; and it is elementary law that no binding waiver of one's rights can be made in such a case as this by one who is ignorant of the facts upon which those rights depend and out of which they grow. Such a waiver to be effectual must be made intentionally and with full knowledge of the material facts. George N. Pierce Co. v. Beers, 190 Mass. 199. Metropolitan Coal Co. v. Boutell Transportation Towing Co. 185 Mass. 391. Bennecke v. Insurance Co. 105 U.S. 355, 359. Pence v. Langdon, 99 U.S. 578, 581. Boynton v. Braley, 54 Vt. 92. Nor did the plaintiff, by taking what it could get under its contract when it could get it, necessarily and as matter of law waive its claim for damages for a failure to make shipments at the agreed times and in the agreed quantities. Garfield Proctor Coal Co. v. Fitchburg Railroad, 166 Mass. 119. Dignan v. Spurr, 3 Wn. 309. Whalon v. Aldrich, 8 Minn. 346. Belcher v. Sellards, 43 S.W. Rep. 676. Clydebank Engineering Co. v. Yzquierdo, A.C. 6.

Nor did the plaintiff's failure to buy coal to fill the deficiencies in the defendant's shipments and to send bills to the defendant for the difference in price, or to make any demand for such difference, constitute a waiver of its claim for damages. The clause in the agreement allowing the plaintiff to do this was inserted for its benefit, and gave to the plaintiff a privilege to be exercised or not at its option. It was not provided as the exclusive means for ascertaining or liquidating the plaintiff's damages. The case is like Fisher v. Barrett, 4 Cush. 381. A similar clause in a contract for the delivery of lumber was construed in the same way in Williston v. Mathews, 55 Minn. 422.

The defendant's sixth, seventh and thirteenth requests were rightly refused.

The eighth request was given with the qualification that the word "strikes" meant strikes at the defendant's mines. The defendant contends that this was incorrect, on the authority of Davis v. Columbia Coal Mining Co. 170 Mass. 391. In view of the proviso near the end of the contract, where "strikes at the mines" are spoken of, it may be doubted whether the rule of Davis v. Columbia Coal Mining Co. should be applied here. But we need not pass upon this question. As its tenth request was given, the defendant was not aggrieved by this modification of its eighth request. The finding made as to the facts involved in its tenth request would have been equally fatal to the defendant if its eighth request had been given in terms. And for the same reason the defendant was not aggrieved by the refusal to give its ninth request.

The questions raised by the refusal to give the defendant's eleventh, twelfth and fourteenth requests may be considered together. The judge ruled in substance that the defendant would not be liable for deficiencies on its part which were due to a strike or a shortage of cars or other causes beyond its own control, if under the circumstances it had treated the plaintiff fairly and ratably with reference to the various other parties with whom it was dealing; that the defendant was not bound under the terms of the agreement to deliver to the plaintiff the whole amount of its order to the exclusion of other customers. This was correct. Oakman v. Boyce, 100 Mass. 477. Jessup Moore Paper Co. v. Piper, 133 Fed. Rep. 108. Luhrig Coal Co. v. Jones Adams Co. 141 Fed. Rep. 617. McKeefrey v. Connellsville Coke Iron Co. 56 Fed. Rep. 212. But the judge found that the defendant, under the rule of law adopted, might have made all the shipments to the plaintiff when and as it had agreed to make them; and the defendant contends that this finding was not warranted by the evidence. Whether this was so or not might have been found to depend upon the question whether the defendant had assumed and become bound by certain numerous contracts for the sale and delivery of large quantities of coal which had been made by one Mitchell before the incorporation of the defendant. The defendant afterwards became the owner of Mitchell's mines and succeeded to his business. The defendant had, in each month after July 30, 1902, when it was organized and began making contracts for the sale and delivery of coal, more than enough coal available to satisfy the requirements of all of its own contracts; but it undertook also to carry out the contracts which before July 30, 1902, had been made by Mitchell; and the defendant's failure to comply with its own contracts, including that with the plaintiff, was due, partly at least, to the fact that it made so large deliveries under the Mitchell contracts as to leave it unable to fulfil its own obligations. The auditor found that the defendant had not assumed and become bound by the Mitchell contracts. He also found that in every month in which there was a shortage on the plaintiff's contract the defendant shipped on one or more subsequently made contracts more coal than such subsequent contracts called for. And the auditor found and reported that the defendant was not prevented from making the shipments called for by the plaintiff's contract by reason of car shortage or other condition of the coal trade beyond its control, and ruled also that the conduct of the defendant in delivering coal on its own contracts made after and when in default on the plaintiff's contract, deprived it of the defense which otherwise might have been open to it that it was prevented from making shipments by causes beyond its own control.

In spite of the very able argument of the defendant's counsel, we find no error in this. The judge was not bound as matter of law to find upon the new evidence that the company had assumed and become bound by the Mitchell contracts. Whatever the new evidence might have been, the auditor's report was prima facie evidence in favor of the conclusion reached by the judge at the trial. The defendant's argument that the letter in which Lathrop, the defendant's president, asserted that the defendant had not assumed the Mitchell contracts, ought not to have been considered upon this question, if it were otherwise valid, would be answered by the fact that it was offered in evidence and admitted without objection. Demelman v. Brazier, 193 Mass. 588, 592. But the argument is not valid. This was a statement made by the defendant's president, its chief executive officer, in his official capacity, in the conduct of its business, upon a matter which naturally would be within his personal knowledge. The decisions relied upon by the defendant, like Boston Hat Manuf. Co. v. Messinger, 2 Pick. 223, and Robinson v. Fitchburg Worcester Railroad, 7 Gray, 92, are not applicable. The judge's findings upon these questions of fact are conclusive.

Nor is there anything in Oakman v. Boyce, 100 Mass. 477, and McKeefrey v. Connellsville Coke Iron Co. 56 Fed. Rep. 212, before referred to, to justify the contention of the defendant that it could excuse, even proportionally, its failure to keep its contract with the plaintiff when it was able to do so without discriminating against those entitled under its other contracts, by making new contracts with others, after the exigency upon which it now relies had arisen. The defendant's fifteenth request was rightly modified, and its sixteenth and eighteenth requests were rightly refused. The exception to the refusal to give the nineteenth request has not been argued, and we treat it as waived. It should not have been given in any event. Summers v. Hibbard, 153 Ill. 102, 110. Nor was the defendant aggrieved by its refusal, in view of the finding that it had coal enough to fill all its own contracts.

As the twenty-first request was given, the only remaining question is whether the damages for demurrage sustained by two schooners should have been refused as being too remote. It must be remembered that the plaintiff was bound to have vessels at Greenwich Piers when the defendant ought to have delivered the coal; and the judge so ruled at the defendant's request. If the defendant did not supply coal for these vessels to the extent and by the end of the period for which it had bound itself, a liability for demurrage well might be found to be the natural and probable result of this default of the defendant, and one which ought to have been within the contemplation of the parties. It was not like the expenses disallowed in Globe Refining Co. v. Landa Cotton Oil Co. 190 U.S. 540, 546, which would have been incurred by that plaintiff in any event, but was an additional expense caused to the plaintiff by the defendant's breach of its contract. It was like the increased freight rates allowed in Merrimack Manuf. Co. v. Quintard, 107 Mass. 127.

Exceptions overruled.