St. Regis Paper Co. v. Hubbs & Hastings Paper Co. ( 1923 )

Plaintiff sues for an unpaid balance on the sale of paper. Defendant, not denying the allegations of the complaint, sets up a counterclaim, alleging that plaintiff is a manufacturer of print paper, such as newspapers are printed on, and that defendant is a broker in the sale of such paper; that defendant as such broker secured contracts for plaintiff from three newspaper publishers for their supply of paper for given periods; that the understanding was that defendant should guarantee the accounts and that the paper so shipped should in the first instance be charged to defendant and not to the newspaper publishers; that plaintiff, after furnishing the publishers paper under such contracts for some time, repudiated its agreement, delivered no more paper and refused to pay defendant the commissions to which it would have been entitled, to its damage.

On the trial it appeared that the transactions between the parties took the following form of written contracts, one set of which was in substance as follows:

Defendant as buyer (for Rochester Printing Company), and plaintiff as seller entered into a contract of sale of paper, 4,500 tons a year for two years from January 1, 1919, price for the first three months ending March 31, 1919, $3.77 per hundred pounds, "price for the balance of the year to be fixed by mutualconsent. In the event that the parties to this agreement shallfail to arrange a price for any quarter before the expiration ofthe preceding three months, this contract, in so far as itpertains to delivery over the unexpired period shall terminate." "If at any time during the life of this contract, both parties can agree on a fixed price for the balance of the contract, that agreement shall take the place of the three months price agreement." The contract under the caption "Remarks" contains the usual provisions relieving either party from liability for failure to take or supply such paper in consequence of strikes and other causes beyond their control. It also provides that the provisions last referred to shall run through to "an original contract" between defendant and the Rochester Printing Company for whose use the contract is placed, and that the publisher and plaintiff are the contracting parties as "tosaid conditions," i.e., as to strikes, etc.

On the same date Rochester Printing Company as buyer and defendant as seller entered into a contract of sale in the same terms as the foregoing, excepting only that the price was fixed at $4.10 per hundred pounds.

The other two sets of contracts differ only as to name of publisher, price, amount of paper and period covered. In the last quarter of 1919 plaintiff refused to agree with defendant on a price for the first quarter of 1920, and finally quoted a price so high that the publishers could not agree on it with defendant. In so doing it acted arbitrarily without making an attempt to agree and for the purpose of terminating the contract, depriving defendant of its prospective profits on the transaction and placing the business in the hands of others.

Defendant contends that this transaction was a sale by the plaintiff to the publisher, the defendant acting as a broker and receiving a commission of two per cent on the contract price. Plaintiff's contention is that the transaction as evidenced by the formal written instruments was a sale to defendant and a resale by it to the publisher. The contract price for the first three months in each transaction was to net defendant two per cent, and this amount was referred to by the parties in their correspondence as a commission.

The trial court submitted to the jury the question whether the defendant was a broker in the transaction and whether plaintiff acted in good faith in trying to fix the price of paper. The jury found for the defendant. The trial justice set the verdict aside and granted a new trial, saying that, assuming defendant acted as broker, its commissions must be limited to two per cent on the paper to be delivered during the first three months of the contract, as the only enforcible contract between the parties was for the first three months' delivery and beyond that nothing but a possibility of future agreement remained.

The Appellate Division held that the contract was between broker and principal and that it implied good faith and required the exercise of an honest attempt to agree on the price of future deliveries; that the case was properly submitted to the jury and that the verdict should be reinstated.

Doubtless a broker's authority cannot be terminated in bad faith so as to permit the principal to take advantage of the broker's efforts in his behalf and at the same time escape the payment of his commissions (Sibbald v. Bethlehem Iron Co.,83 N.Y. 378), but good faith does not require the contracting parties to do more than they are expressly or impliedly bound by their contract to do, and the question arises as to the real contract of the parties evidenced by their solemnly executed writings.

The written agreements, except as to price fixing, are complete, certain, explicit and free from ambiguity. They are unmistakably contracts, not of brokerage, but of purchase and sale. The parties have put their bargain into the form they chose. The court has no power to alter or vary the terms which they have deliberately used to express their intention. The real agreement of the parties as thus expressed is that plaintiff will sell and defendant will buy and that defendant will sell and the publisher will buy the paper on the conditions indicated. "When a legal act is reduced into a single memorial, all other utterances of the parties on the topic are legally immaterial for the purpose of determining what are the terms of their act." (Wigmore on Evidence, § 2425.) The evidence in the case all tends to establish that the written contracts are the full expression of the terms of the parties' agreement. When the question is one of the interpretation of a contract, entire in itself in all particulars, it is only when different inferences may fairly be drawn as to the meaning and effect of the written language used, that the relation of the parties and the surrounding circumstances are to be considered by the jury in arriving at their intention. (Lamb v. Norcross Bros. Co., 208 N.Y. 427,431.) Evidence of a parol brokerage agreement was, therefore, incompetent to show that the formal writings were not the final repository of the agreements before us. "You can no more add to or contradict its legal effect by parol stipulations preceding or accompanying its execution than you can alter it through the same means in any other respect." (Thomas v. Scutt, 127 N.Y. 133,140.)

But one element of the contracts was left open to future negotiations. Prices were to be fixed by mutual agreement and if the parties did not agree, the contracts were to terminate. These terms are so indefinite as to have no legal significance; they amount to nothing more than an agreement to make a future agreement; an agreement to agree is not enforcible. Plaintiff exercised its legal right in refusing to be bound thereby. (United Press v. N.Y. Press Co., Ltd., 164 N.Y. 406, 413;Varney v. Ditmars, 217 N.Y. 223.) Defendant's counterclaim should have been dismissed.

Even if for proper interpretation the contracts are to be read in the light of the collateral correspondence, it appears that the word "agent" was used by the parties, not meaning "one who acts for a principal," but in the not unusual sense of "one with or through whom another transacts business," and that the word "commissions" was used for the equivalent of "profits." Thus when dealers advertise themselves as agents or exclusive agents for certain manufactured articles such as automobiles, it does not follow that they are selling on a commission for the manufacturer. On the contrary, it often appears that they are compelled to purchase out-right and are expected to sell for a fixed percentage of profits which might loosely be styled commissions. The disposition of the case is, therefore, placed on broad fundamental grounds and not on narrow technicalities which might serve only to conceal the real obligations of the parties.

The judgment should be reversed and judgment granted in favor of plaintiff against defendant for $44,426.03, with interest from January 15, 1920, with costs in all courts.

HISCOCK, Ch. J., HOGAN, CARDOZO, McLAUGHLIN, CRANE and ANDREWS, JJ., concur.

Judgment reversed, etc.