Nitro Powder Co. v. Agency of Canadian Car & Foundry Co. , 233 N.Y. 294 ( 1922 )

This is an action to recover damages for breach of contract to sell trinitrotoluol, commonly known as TNT, which is a high explosive war material. Plaintiff and defendant on October 24, 1917, entered into a written agreement of sale and purchase of a large quantity of salvaged TNT at thirty-one and twenty-five cents a pound. After defendant had delivered one carload, the government of the United States took over the remaining portion by government order, dated October 30, 1917, paying therefor forty-five cents a pound. Plaintiff contends that defendant induced this taking by the government and that it must respond in damages for the loss sustained by plaintiff. The taking was a legal taking within the National Defense Act of Congress. The question is whether the contract thereby came to an end from causes beyond the control of the parties. The contract contains the following clause:

"It is mutually agreed that the seller will only be called upon to deliver such quantity of above material as may be reclaimed from Russian shells at Kingsland, and that should the quantity be reduced by fire, explosion, Government taking over thematerial, or any cause beyond the control of the Seller, the Seller will not be called upon to replace such shortage."

On well-established principles of the law of contracts, the disposition of this case by the courts below was correct. "When people enter into a contract which is dependent for the possibility of its performance on the continual availability of a specific thing, and that availability comes to an end by reason of circumstances beyond the control of the parties, the contract is prima facie regarded as dissolved. The contingency which has arisen is treated, in the absence of a contrary intention made plain, as being one about which no bargain at all was made." (Tamplin Steamship Co. v. Anglo-Mexican PetroleumProducts Co., [1916] 2 A.C. 397, 406.)

The subject-matter of the contract was the quantity of material reclaimed from Russian shells as that quantity might be reduced by government taking over the material. The contract is in terms conditional on governmental inaction and subject to the condition that if the government should requisition the goods and render it impossible that the seller should perform its contract, performance should be excused. The taking by government completely frustrated the contract because it left no material upon which the contract could operate. As soon as the material was taken, defendant was released from all obligation to the plaintiff. Defendant had no control over the situation. It merely acquiesced in action which it had no power to stop. Plaintiff could not, therefore, recover the difference between the conditional contract price and the government price. (TheClaveresk, 264 Fed. Rep. 276; The Isle of Mull, 278 Fed. Rep. 131.)

The fact that the defendant sought or welcomed the taking of the TNT by the government is immaterial. It was not bound to say to the government representative: "You must wait until we deliver to plaintiff and then make your requisition on it." Sovereignty is not thus dealt with. Such an exhortation would have been futile. "It was not the defendant or its officials who created the situation. It was the Government of the United States acting through its army officers." (Mawhinney v. Millbrook WoolenMills, 231 N.Y. 290, 300.)

But it cannot be said that the taking by the government was induced or procured by the defendant. Defendant was not an unwilling party, but the taking was not dependent upon its consent. No doubt it was complaisant if not eager. That its attitude had any effect upon the result is purely speculative. Its dealings with the government had begun prior to the contract with plaintiff of October 24 and had on October 15, 1917, progressed to the point where the government was contemplating the purchase of the TNT if tests proved satisfactory. An unsatisfactory test had been made on October 19, 1917. After the contract with plaintiff was made defendant did not recall its instructions to its representatives who were conducting the negotiations with the government. On October 27 the government first expressed its intention to take over the material to be re-crystallized so that the foreign matter would be removed. This action was, no doubt, the fruit of the earlier negotiations with defendant, but the case is destitute of the suggestion that after the contract in suit was made defendant went to the government and brought the material to its attention, or induced it to act where inaction was imminent, in order to deprive plaintiff of its prospective advantages.

The government was the sole purchaser of usable TNT as every one knew. If it would take this salvaged material which had not on the date of the contract in suit proved satisfactory, plaintiff had no claim against the defendant. Such is the gist of the entire transaction. When the government was satisfied, plaintiff's rights came to an end.

The judgment should be affirmed, with costs.

HISCOCK, Ch. J., HOGAN, McLAUGHLIN, CRANE and ANDREWS, JJ., concur; CARDOZO, J., concurs in result.

Judgment affirmed.