Ellis v. Miller , 47 N.Y.S. 824 ( 1897 )

O’Brien, J.:

In disposing of the second counterclaim the learned trial judge said : “ These people had been doing business for some years. It does not appear that during that period there was any understanding or agreement covering any particular period, or that any particular amount of goods should be purchased. The defendants did purchase a large quantity of goods from the plaintiff, but there was no obligation at any time prior to the commencement of this agreement to buy any at all. Row, the period arrived in the course of their business transactions when they thought they ought to have a little more definite understanding as to terms, whereupon they entered into this agreement, which, as far as appears on the face of it, provided that, when they did buy goods during the next five years, it should be under these conditions and upon these terms. There had not been any obligation before this to buy any particular amount; there had not been any obligation on the part of the plaintiff to sell any particular amount, or any at all. * * * It could have been very easily stated if there had been any desire on the part of the parties to impose an obligation to sell or an obligation to buy.” •

Considering the language of the agreement itself, we think that this construction was not only correct, but is enforced by the course of dealing between the parties. The agreement covers only the terms of sale of such cigarettes as the plaintiff might sell, and the defendants might buy, and does not create, or purport to be, an obligation of the plaintiff to sell, or of the defendants to buy, any cigarettes whatever. The obvious meaning of the language employed was that whatever purchases and sales were made by the parties during the ensuing five years, should be on the terms expressed in the agreement, and that in consideration of such terms the defendants agreed not to push the sale of any other cigarettes made of bright tobaccos or to offer “ Recruit ” cigarettes for less than the stipulated price. It would be going a long way to import into such an agreement implied covenants on the part, first, of the plaintiff to sell, and, secondly, of the defendants to buy, any specified amount of cigarettes; and yet, as there are no express covenants to that effect, such must necessarily be implied if the contract is to be regarded as sufficiently definite to be enforcible.

The case of Baker Transfer Company v. The Merchants' Refrigerating & Ice Manufacturing Co. (1 App. Div. 507), relied upon by the appellants, is entirely different. That was “ an action brought to recover damages for the breach of a written agreement under seal which stated, in substance, that the defendant was engaged in the manufacture of ice and would have an output of from 75 to 100 tons per day, and that the intention was to dispose of this ice and to deliver the same to various customers, and provided that the plaintiff should, during the term of two years, take the ice from the defendant’s plant and deliver it to the customers ; that the plaintiff should provide a large number of horses and wagons for delivery; that if the plaintiff did not deliver promptly the defendant might, after notice to the plaintiff of such default on his part, do so and might charge the plaintiff with the cost of so doing; that the plaintiff should receive for delivery a certain sum per ton, and that the defendant might after the expiration of one year purchase the plaintiff’s horses and delivery wagons, which did not contain any promise upon the part of the defendant that it would furnish to the plaintiff the ice which was to be delivered to the customers.” And it was held “ that in order to reach a result which the unequivocal acts of the party indicated that they intended to effect, the court would imply a covenant on the part of the defendant to furnish the ice for the purpose of car. rying out such intentions.” It will be noticed that in the contract itself, there considered, there was a certain and assured basis for the implication, both with respect to the goods themselves and. the quantities. Here there is an absence of any specific quantity to be sold or purchased on which to base an implication to that effect. The defendants here seek damages for loss of profits between certain dates covered by the written agreement, founded on the 'refusal of the plaintiff to sell the cigarettes. But as the agreement does not obligate the plaintiff to sell, or the defendants to purchase, it is difficult to see upon what theory an action for damages would lie, or, if it would he, upon what basis there could be a computation of such damages.

We think, therefore, that the disposition made of the case below was right, and that the judgment should be affirmed, with costs.

Van Bbunt, P. J., concurred.

Ingraham, J.:

The second counterclaim alleges “ that the plaintiff has, since about March 4, 1894, and before the commencement of this action,' refused and omitted to perform the said contract on his part, and still refuses to perform the same, and, prior to the, commencement of this action, gave notice to the defendants of his intention not to perform the same in the future,” and it is for this breach of the contract thus alleged that the defendants demand a judgment for damages.

The only evidence to prove this breach of the contract is two letters from the defendants; one dated Baltimore, March 4, 1895, by which the plaintiff notified the defendants that lie had “ this day sold and transferred all our business brands and good will to the American Tobacco Company, who will hereafter manufacture and sell the goods heretofore manufactured by us, as our successor. Kindly in future send all orders for our goods to the American Tobacco Company at their office No. 507 W. 22nd St., in New York City.” I do not think that this can be said to be a notice to the defendants that the plaintiff would refuse to perform his contract. He notified the defendants that he had assigned his business to the American Tobacco Company, who would manufacture and sell the goods theretofore manufactured by him, with a request to order goods in the future from that corporation. There was no explicit declaration that the plaintiff would not furnish the goods that his contract called upon him to furnish, in the event of the corporation’s declining to perform the contract. It was rather a request to the defendants to purchase the goods in the future from the corporation to whom the plaintiff’s business had been transferred, with a notice to defendants that the goods that defendants were entitled to demand would be furnished by the transferee; and in the interview which followed the receipt of this letter, it was assumed that the contract was binding. The plaintiff then asked the defendants to release Mm (the plaintiff) from the contract and offered for such release the sum of $1,000. There was nothing in this interview to justify a finding that the plaintiff refused to abide by the contract, or to furnish the defendants such goods as were necessary to enable him to perform the contract on his part. Nor do I think that the other correspondence is evidence of a breach of the contract. In the letter of March 23, 1895, which appears to have been the last letter written by the plaintiff, the plaintiff again notifies the defendants that the American Tobacco Company had purchased his business and that they (the defendants) could apply in the future for all goods manufactured by him to the American Tobacco Company, who would furnish them terms upon application. There is no' explicit declaration here that the plaintiff would not furnish the defendants any goods, and nothing to justify a finding that the contract had been broken by the plaintiff, or that he had expressly notified the defendants that he would refuse to perform the contract. The contract, itself, did not require the plaintiff to furnish the defendants any amount of goods at any particular time. In fact, the only obligation of the plaintiff to the defendants was implied from the provisions of the contract, and before such an obligation could exist, the defendants must order goods from the plaintiff specifying what they required. Eo such order was ever given. Eo demand was made upon the plaintiff to comply with his contract, or to furnish any goods; but, on the contrary, the defendants simply refused to pay for goods which had been delivered and for which they were clearly liable. There could be no breach of this contract by the plaintiff until the defendants had ordered the goods under the contract, and while a plain declaration on the part of the plaintiff that he would refuse to deliver any goods thereafter would excuse a failure of the defendants to demand the delivery of the goods to them, in the absence of such a plain declaration it seems to me that there was no breach of the contract until an order should be 'given by the defendants to the plaintiff, or a demand made upon him for goods, which, under his contract, he was bound to furnish. This question does not seem to have been passed upon by the court below.

The court, on dismissing the complaint, said that, ‘[assuming that the plaintiff refused to sell any more goods and committed a breach of this agreement as far as it was possible for him to do, the counterclaim does not set forth a cause of action.” I agree with Mr. Justice Patterson that the court erred in that construction of the contract; but to entitle the defendants to recover upon their counterclaim they were bound to prove a breach of the contract by the plaintiff; and I do not think that there was evidence sufficient to sustain a finding of such a breach by the plaintiff.

I think the judgment should be affirmed.