Browne v. . Paterson ( 1901 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The contract which we are called upon to construe presents a convincing illustration of the difficulty in framing even a simple business contract in such plain language that there can be no difference of opinion as to its meaning. Whether this difficulty is due to the paucity or wealth of our language, or to lack of care in its use, are questions which might furnish interesting and instructive themes for academic discussion, but would be of no practical value in the attempt to decide which of the two constructions contended for by the litigants before us is the one to be adopted. However that may be, we are confronted by the fact that two eminent jurists have expressed opposing views upon this particular contract in opinions which are characteristically able and exhaustive and leave but scant opportunity for original analysis or interpretation. The learned referee, before whom the case was tried, held with the plaintiffs, and the learned Appellate Division has decided that the defendants construction of the contract is the true one. We can best focus attention upon the specific and narrow question involved by again quoting that portion of the contract which contains the language to be construed.

"Sold to Messrs. Knudson, Paterson Co. for account of Messrs Hemenway Browne.

"One-half of the cargo per Wachusett chartered to load not exceeding twenty-two hundred (2200) tons, usual good merchantable quality Nitrate of Soda, to arrive at New York, bought to be aMarch and or April 1889 shipment from West Coast South America,also bought to test by South America assay not under 96% Nitrate nor over 1¼% Salt, if of inferior test, sellers to allow full coast allowance received." By way of premise to our conclusions we adopt, without qualification, the following initial postulates of the learned Appellate Division: (1) "In construing contracts of this kind the circumstances under which the contract was made, the manner of dealing in the business so far as it was known to both parties, and the purpose for which the contract was made are to be considered." (Behn v.Burness, 3 B. S. 751, 757; Lowber v. Bangs, 2 Wall. 728.) (2) That in arriving at the construction of mercantile contracts it is to be remembered that merchants are not in the habit of putting into such contracts stipulations to which they do not attach some value and importance. (Bowes v. Shand, L.R. [2 App. Cases] 455, 463.) (3) That the words "to be a March and or April 1889 shipment," standing by themselves, would be considered as creating a warranty or condition precedent that shipment was to be made in those months. (Norrington v. Wright,115 U.S. 188; Hill v. Blake, 97 N.Y. 216; Bowes v. Shand, L.R. [2 App. Cases] 455; Ledon v. Havemeyer, 121 N.Y. 179.) The facts of the case disclose that this contract was made in Boston between large dealers in nitrate of soda, both of whom knew that American contracts for the sale and purchase of that commodity were usually based upon executory South American contracts, the details of which as to quantity, place and time of shipment were important if not controlling factors in determining the provisions of the American contracts. The obvious purpose of this contract was, upon the one side to sell and upon the other to buy a cargo of nitrate of soda under these known conditions. As we have seen, the words "to be shipped in March and or April" or "to be a March and or April shipment" would amount to a warranty or condition precedent that the goods should be shipped. Let us at this juncture remember "that merchants are not in the habit of putting into such contracts stipulations to which they do not attach some importance," and then apply this rule to the case in hand. What is the result? Simply that the word "bought," which precedes the words "to be a March and or April, 1889, shipment," is worse than useless if defendants' construction of the contract is to be accepted. Without the use of the word "bought" we have a plain, specific and authoritative declaration which, in any view of other portions of this contract, is entirely consistent with the contention that there was a warranty of shipment within the months named. Within the rule referred to it is to be assumed, therefore, that the word "bought" was not used in vain. It could not have been employed to make plain that which was so much plainer without it, and when we recall the circumstance that the contract was made with reference to pre-existing executory contracts, to which the vendor was a party, we must conclude that if this word serves any useful purpose it was simply to identify or characterize the thing sold as the same previously bought by the vendor.

This view seems to be supported by the grammatical construction of the contract. There was sold one-half of the cargo of the Wachusett, chartered to load not exceeding 2,200 tons usual good merchantable quality nitrate of soda. The cargo was "bought to be a March and or April, 1889, shipment. * * *". Also "bought to test" * * * not under 96% Nitrate nor over 1¼% Salt. What was chartered? The ship of course. Chartered by whom? Concededly by the sellers. Then to whom do the words "bought to be" and "bought to test" refer? Obviously to the same parties. The words "chartered" and "bought" are both participial adjectives which describe the previous acts of the seller and not the present purpose of the buyer. The word "chartered" limits the word "Wachusett" and the word "bought" limits the word "cargo." It seems to be conceded that the word "bought" is used in the same sense in both instances where it occurs. If, however, this question were regarded as open for discussion we think it could be effectually disposed of by the suggestion that the conjunction "also" so connects the two parts of the sentence in which the word is found as to leave no room for doubt. The expressions "bought to be" and "bought to test" should, therefore, be construed alike.

We quite agree with the learned Appellate Division that the only purpose of the agreement was to fix the rights of the parties. But the conclusion does not follow that it could not have been regarded as important to recite what the sellers had previously done. This was a "sold note." A simple statement of the quality and amount of nitrate sold, of the time and place of shipment and the vessel to be employed would have definitely and clearly fixed the rights of the parties if the statements as to time and quality were to be regarded as warranties. There is no apparent reason why the contract should have been incumbered with these meaningless expressions if the parties had in view nothing more than a statement of what the buyers had bought and when, from what place and in what vessel it was to be shipped to them. But a different situation is presented when we refer to the seller's position, the character of the thing sold and the circumstances under which the contract was made. The subject-matter of the contract was a cargo of nitrate, "bought to test," not less than 96% of nitrate and not more than 1¼% of salt. If the parties had intended that the buyers were to be bound by that test and no other, they could simply have recited that the plaintiffs had sold to the defendants goods of that description, and that would have ended it. But it did not end there. The buyers were to have the full coast allowance received by the sellers for any inferiority of quality, and here we obtain a clear view of the purpose of the words "bought to test." It was to show that the sellers had bought nitrate which was represented to them to be of the standard test, and they sold it as such to the buyers with the reservation that if it proved inferior the buyers could receive the same rebate that was allowed to the sellers under their contracts. The same argument may be applied to the words "bought to be." If the contract had simply said "to be a March and or April, 1889, shipment," that would have fixed the status of the parties from the defendants' point of view. But the subject-matter of the contract was nitrate of soda which had not then been delivered to the sellers, and which was to be shipped in a vessel not then at the loading port. So much, at least, was known to both parties. Hence it is not unreasonable to suppose that the language of the contract was chosen with reference to the exigencies which might arise either in the delivery of the goods to the sellers, or in the sailing of the vessel at the appointed time. Viewed in that light, the contract is invested with a meaning which is consonant with the probable purpose of the parties, with the ordinary acceptation of the words used and with common sense.

It is urged, however, that there was clearly a warranty that the cargo should be shipped on the "Wachusett" and from the west coast of South America, and as the words of limitation refer quite as much to the ship and the place of shipment as to the time of shipment and the quality of the nitrate, the existence of a warranty in the one case must necessarily prove it in the other. This does not follow even if we assume, as we do not, that there was a warranty of ship and place. The place was a known quantity, with reference to which the words of limitation have no particular application. The thing sold was of a character and quality which, probably, could not have been duplicated at any other place, so that a warranty of place would not necessarily depend upon, or be connected with, a warranty as to other things. With regard to the vessel, a different question is presented. We agree with the learned referee that there was something more than a mere representation or agreement that a vessel was to be chartered to load not exceeding 2,200 tons, but also something less than a warranty or condition precedent upon which the validity of the contract depends. When a contract of shipment names in positive terms the vessel and time of loading or sailing, it is a vital part of the contract, for failure of which the vendee may repudiate the contract because the thing offered is not the thing sold. (Clark v. Fey, 121 N.Y. 470; Norrington v. Wright,115 U.S. 188; Bowes v. Shand, L.R. [2 App. Cas.] 455; Behn v.Burness, 3 Best Smith, 751; Corkling v. Massey, L.R. [8 C.P.] 395.) Here the Wachusett was chartered when she was at a distant port. She was chartered to take a cargo which was "bought to be a March and or April, 1889, shipment." This was known to both parties, for the contract says so. The perils of the sea might destroy or retard the vessel, and the vicissitudes of the trade might prevent the delivery to the sellers of a sufficient quantity of nitrate to make a cargo at the appointed time. Thus, while it was undoubtedly the expectation of the parties that the Wachusett should carry the cargo, the language of the contract does not so peremptorily designate the Wachusett as the only vessel whose cargo would be accepted as to create a warranty. This view of the case receives some support in the language of the marginal note "Should vessel named in this contract be lost before reaching loading ports another vessel or vessels to be substituted for same shipment or as near thereto as practicable." We have here a distinct recognition of the contingencies which might require the substitution of another vessel or vessels for the "Wachusett," and while the words "as near thereto as practicable" clearly refer to the time of shipment, it is equally apparent that neither the particular vessel nor the specified time was regarded as indispensable to the fulfillment of the contract. It is probably true, as suggested by the learned referee, that if the representations as to the ship were made by the plaintiffs with knowledge of the impossibility of getting her to the loading port in time to comply with the terms of the contract, the defendants having no such knowledge, the plaintiffs could have been held liable for the falsity of their representations had not the defendants waived their right to insist upon this defense by placing their refusal to comply with the contract upon another and distinct ground. The only defense interposed by the defendants is based upon the alleged condition precedent that shipment was to be made in "March and or April." (Littlejohn v. Shaw, 159 N.Y. 188;Smith v. Pettee, 70 N.Y. 13; Johnson v. Oppenheim,55 N.Y. 280; Woolner v. Hill, 93 N.Y. 576; Cunningham v.Judson, 100 N.Y. 179; Knox v. Schoenthal, 13 N.Y. Supp. 7;Maskelinski v. Wazsinenski, 20 N.Y. Supp. 533; Bradley v.Cole, 6 Hun, 660.)

It is urged for the defendants that if the stipulations of the contract relating to the time of shipment do not amount to a warranty or condition precedent, then it follows that the defendants would be required to accept the cargo no matter when it might be offered. The simple answer to this is that if there was no warranty or condition precedent, as to time, then the plaintiffs were required to deliver within a reasonable time. We think, upon the whole, that the referee's interpretation of the contract was right. The case is difficult, because the question is narrow; but that is because the parties to the contract have made it so. Instead of stating plainly and explicitly the terms thereof, they have chosen to rest it in language which, to say the least, is of doubtful import. In such a case no purely artificial or arbitrary rule of grammatical or legal construction of language can always be relied upon to work a just result. The court must get, as nearly as may be, into the atmosphere of the transaction, to learn what the parties intended from what other intelligent and fair business men would probably have done under similar conditions. When all these tests together point in one direction, as we think they do in this case, the court may properly apply the construction which they uphold, even though the question may not be wholly free from doubt. We have refrained from citing, or commenting upon, many of the authorities presented, pro and con, because they are inapplicable by reason of differences between the language of the contracts there construed and the contract here under consideration. The learned Appellate Division having reversed the judgment entered upon the report of the learned referee solely upon the construction of the contract, we must take the facts as found in the trial forum. Upon the facts found the learned referee has decided that the course of the plaintiffs in storing the nitrate, advertising it for sale, and in the sale itself, was reasonable and proper, and with that finding we cannot interfere. It follows, therefore, that the order of the Appellate Division must be reversed and that the judgment entered upon the report of the referee must be affirmed, with costs to the plaintiffs in all courts.

PARKER, Ch. J., BARTLETT and MARTIN, JJ., concur; VANN and CULLEN, JJ., dissent; GRAY, J., absent.

Order reversed, etc.