Mayor of Baltimore v. Schaub Bros. , 96 Md. 534 ( 1903 )

On June 18th, 1901, the plaintiffs, dealers in coal, entered into a written agreement with the defendant to supply certain departments of the City Government, including the School Board, with coal up to April 15th, 1902, to be delivered at such times, and in such manner as provided in specifications forming part of the agreement. This contract has been complied with by both parties except as to the coal required for the School Board. The approximate quantity required for the School Board, as stated in the blue print attached to the specifications, was 6290 tons, of which two-thirds was to be delivered during July and August, and one-third as needed; but the School Board reserved the right to order less than the estimated quantity, if less was needed.

The plaintiffs made the first delivery July 16th, 1901, and continued to make deliveries up to August 29th, 1901, aggregating 2101 tons, when they refused to make further deliveries, alleging that the defendant had broken the contract by failing to make payment as provided, and had thereby discharged the plaintiffs from further liability under the contract, and this suit was brought October 28th, 1901, to recover for the coal delivered amounting to $11,062.35. The defendant admitted the correctness of the statement of coal delivered, and that it was indebted to the plaintiffs in the sum of $5,326.42, but filed a plea of set off alleging that the plaintiffs had broken the contract by refusing to make further deliveries, and that they were indebted to defendant in the sum of $5,735.93 "for actual damage caused by the failure of the plaintiffs to fulfill and carry out said contract, as shown by the statement attached to this plea, and prayed to be taken as a part thereof." Issues were properly joined on the pleadings, and the case went to trial before JUDGE DENNIS sitting as a jury. The amount admitted to be due was paid before the actual trial, and a verdict was rendered for the plaintiffs for $6,175.46, being the full amount claimed after deducting the payment made. The only exception taken was to the rulings upon the prayers, and the only question thus presented is whether the defendant is entitled to the set off claimed.

The provisions of the contract material to the consideration of the case are as follows:

Payments. "Payments will be made once a month by each department for all the coal delivered to that department by the contractor during the previous month, and will be made on the basis of what the coal shows on analysis." Provision is made for taking samples of coal for analysis from each shipment made to any department during the month. "At the end of the month all the samples thus accumulated will be thoronghly mixed, and a quart preserving jar will be filled with the mixture, labelled and sent to the City Chemist. The City Chemist will, at the end of each month, thoroughly mix the contents of all these jars, and from that mixture take three quart jars for analysis, and will send to each department the result of his analysis of any one of these three jars, and the department will then adjust the contractors bill, adding or deducting a given percentage of gain or loss upon given percentages of ash shown in the coal."

Rejections. "If the analysis shows that the shipments of coal made by any contractor during the month, do not come within the specifications, * * * then when the next shipment made by the contractor, of the same class of coal is received, an analysis will be made of a sample of this coal at once, and if that analysis shows that the coal does not come within the specifications, that shipment will be rejected, and must be removed at once at the contractor's expense."

Water Engineer to interpret contract. "The contractors agree that the Water Engineer is to interpret the terms and conditions of this agreement, and the specifications accompanying; and in event of any dispute as to the meaning of any of the provisions and clauses of same, the decision of the Water Engineer is to be final."

The testimony in the case may be summarized thus:

Lewis W. Schaub, one of the plaintiffs, testified that after the first month's delivery, he took a statement to Mr. Owens, Supervisor of School Buildings, who had the matter in charge, and who went over the bill with him and corrected it; that he told Mr. Owens he would like to have the money, as the contract was taken at a low figure, and they needed the money, and that Mr. Owens told him they should have it as soon as possible. That they continued delivering through August, and that during that month he went to Mr. Owens more than once, and told him they must have the money, as their shippers had made an agreement with them according to their own specifications with the defendant, and if they did not pay the shippers accordingly, they would not ship any more coal. That they went again to urge payment, and were told the analysis had not been sent in, and that he replied, "you have to look out for that yourself; we have only to deliver the coal." That they went again in September and were told there was nothing for them, and that he then went to see the shippers who replied, "we can't put up with that we must have money;" whereupon on September 3rd, they sent to the School Board the letter of that date set out in the evidence, stating that both Mr. Owens and Mr. McGill had told them they were unable to pay them — because no analysis had been received from the City Chemist, and that they would not be paid until such analysis was received, also stating that they had called on Prof. Lehman, the City Chemist, in reference to the matter, and that he told them that with an extra force, he could not furnish the analysis required by the School Board by Christmas; that it was apparent the defendant was unable to keep its part of the agreement, and having failed to do so, they must refuse to ship it any more coal. This witness further testified that he told Mr. Quick, the Water Engineer, that they had trouble about the payment and needed money, and that he said they would do the best they could, but could not say he asked Mr. Quick whether they had to wait for payment until an analysis was made; also that his brother, Francis J. Schaub, was with him when he talked with Mr. Quick, and that his brother did most of the talking at that time. Francis J. Schaub testifying for the plaintiffs, said he was a member of the bar, and attorney for the plaintiffs, and confirmed Lewis W. Schaub in detail. He said the plaintiffs understood that defendant had the month of August to make the analysis for July, and they so told Mr. Owens, when they presented the July bill, but asked him to hurry Prof. Lehman up, and he said he would; also that he went to see Prof. Lehman who said he would do the best he could, but that the way the School Board wanted the analysis he could not get them through by Christmas even with six assistants; also that he had seen Mr. Quick and asked him if he could not hurry it up, and he said he had nothing to do with it; that after the letter of September 3rd, there was a meeting at the Mayor's office when Mr. Quick and Mr. Owens were present, and Mayor Hayes, and an effort was made to arrange for delivering the residue of the coal under the contract, and he agreed to this for the plaintiffs if defendant would take the coal by the manifest weight, and Mayor Hayes thought this was reasonable, but Mr. Owens thought this would not be just to the other dealers, and no agreement was reached. He also said that Mr. Owens phoned him after this interview to ship the coal, and he went to see Gov. Whyte about it, and Gov. Whyte said, "get an order in writing before delivering any more coal. If you ship that coal on Mr. Owens say so it will get you in trouble;" that Mr. Owens at his request, on the 7th of September, phoned him the analysis, but said nothing about payment, and that if he had, they would have been glad to accept it.

Prof. Lehman who also testified for the plaintiffs, confirmed the testimony of the two Schaubs. He says that he furnished no analysis to the School Board until September 6th; that he was called sometime in September to the Mayor's office, by the Mayor himself, to explain why there was delay in the coal analysis, and subsequently on the same day, received instructions how to furnish the analysis to the School Board, and they were then furnished to Mr. Owens on September 6th, but before that, he was not informed that analysis in detail were not required, and understood that a separate analysis was required from every school; that before receiving the instructions in September he did tell the plaintiffs he could not furnish the analysis with the force at his command, before Christmas, but after receiving Mr. Owens' instructions on the day of the meeting at the Mayor's office he could easily furnish them in the required time of one month; that he was not furnished with a copy of this contract until after September 6th, and only received a lot of samples without any directions as to how they were to be treated, and that he wrote Mr. Schaub August 2d 1901, no analysis would be made until all the coal from one district was furnished, and then it would be for all the business of that district. He said on cross-examination that he was never directed to analyze the July coal without waiting for the August coal, though the plaintiffs told him they were depending upon the analysis for their payment, and were anxious to have the analysis made before August 31st, as they feared trouble with their shippers if they did not receive payment from the School Board. Robert L. Windsor, a clerk for Lynah Read, from whom plaintiffs purchased their coal, testified for plaintiffs, that the specifications furnished by the defendant with the contract in this case were shown to Lynah Read, and were the basis of their contract with plaintiffs as to payments; that is, all coal was to be settled for in the month succeeding that in which it was shipped. This closed plaintiff's case, and Benjamin B. Owens was the first witness for defendant.

His testimony did not materially contradict any of the plaintiff's testimony. He admitted that about August 1st the plaintiffs brought in the bill for July deliveries which was adjusted, and he told them that as soon as he got the analysis the bill would be paid; that they continued delivering through August, and frequently urged payment for July, and his reply always was that as soon as the analysis was received, payment would be made; that after August 29th, they stopped deliveries without telling why, and that they had not yet told why, though he admitted receipt from the School Board of plaintiffs' letter of September 3rd. He also said that the plaintiffs had only delivered about 2,000 out of 6,000 tons, though the contract required the delivery of two-thirds during July and August, but he admitted the correctness of plaintiff's statement, that as no coal was ordered until July 16th, they were given until September 16th to furnish the two-thirds, as an offset to the two weeks in July. He also admitted that he gave no instructions to Prof. Lehman as to the method of analysis prior to the meeting in the Mayor's office, and added that he had never since given any such instructions, and that Prof. Lehman was mistaken in his testimony on this point. He also proved the purchase of coal from other parties for the School Board after plaintiffs ceased delivering, and that the increased cost was the amount claimed by way of a set off.

Alfred M. Quick for defendant then testified that he was the Water Engineer, that the plaintiffs did complain to him of inconvenience to them by the delay in the analysis, but that they did not apply to him for any interpretation of the contract. Upon this testimony the prayers were offered which will be set out by the Reporter in the statement of the case.

The contention of the plaintiffs is that the monthly payments provided for, were meant and understood by the parties to be of the essence of the contract, and, the defendant having failed to fulfill this stipulation, that the plaintiff had a right to put an end to the contract. The contention of the defendant is, that the analysis of the City Chemist is an absolute condition precedent to payment, and that the failure of the chemist to make the analysis within the time limited for payment, enlarged the time for payment; and also that the question whether the city was in default by reason of non-payment by September 1st, for the July deliveries, was a question to be submitted to and determined by the City Engineer; and consequently that the plaintiffs had no right to put an end to the contract, and defendant was entitled to set off damages arising from its breach.

We are of opinion that the contention of the plaintiffs is correct, and that neither position of the defendant can be maintained. We cannot distinguish this case from that ofMcGrath v. Gegner, 77 Md. 331, which we regard as conclusive of this controversy. There the plaintiffs agreed to buy of the defendant all the oyster shells made during the season, and to pay on the first day of each week for the shells delivered during the previous week. After the delivery of a large quantity, the defendant notified the plaintiff that the contract was at an end, on account of his failure to make the weekly payments, and refused to deliver any more shells. JUDGE ROBINSON, speaking for the full Bench, said: "We cannot suppose for a moment that the defendant meant to give an indefinite credit to the plaintiff, nor even a credit until all the shells were delivered or taken away. On the contrary, looking to the terms of the contract, it seems to us it was the intention of the parties that the weekly payments by the plaintiff should constitute an essential part of the contract. In other words, it was of the essence of the contract. In Withers v. Reynolds, 2 Barn. Adol. 882, where the defendant agreed to supply the plaintiff with straw to be delivered on plaintiffs' premises, at the rate of three loads in a fortnight, during a specified time, and the plaintiff agreed to pay thirty shillings for each load so delivered, it was held that according to the true construction of the contract, each load was to be paid for on delivery, and that on the plaintiffs' refusal to pay for the straw as delivered, the defendant was not bound to deliver any more. And in Curtis v.Gibney, 59 Md. 131, treating the contract as an agreement on the part of the defendant to consign 10,000 bushels of barley to the plaintiffs, the shipments to be made at different times, and payment to be made on receipt of each shipment, BARTOL, C.J., said: ``It is equally clear that, upon his failure to remit to the appellant the proceeds in his hands arising from the sale of the barley according to the terms of the contract with the appellant, the latter was not bound to make further consignments to him.'"

In the case before us, a careful examination of the contract, we think will leave no question as to the intention of the parties, and their conduct will confirm the construction placed upon the contract. It is not reasonable to suppose that the plaintiffs would enter into a contract, the fulfillment of which on their part, would require the use of so large an amount of money without some corresponding obligation on the part of the defendant to reimburse them during the progress of the fulfillment. In order to provide for payments to be made by them, it was essential that they should know when they could demand payments to be made to them, and accordingly, the proof shows that they bound themselves to pay their shippers, Lynah Read, in the same manner that the city was bound to them. It is thus made clear that they attached importance and value to this stipulation for time of payment, as observed in Bowes v.Shand, 2 Appeal cases, 455.

Again, we think it is plain that the parties contemplated anearly monthly analysis, in order to prevent the hardship upon the plaintiffs of full delivery for a succeeding month, with the possibility of its rejection and consequent removal at their expense, for it is expressly provided that if the analysis for any month shows that the coal does not conform to the specifications, that when the next shipment is received, an analysis will be made at once, and if that analysis shows the coal does not conform to the specifications, that shipment will be rejected and must be removed at the contractor's expense. For these, and other reasons of like character, we do not think the analysis can be regarded as an absolute condition precedent to payment, and we find nothing in the cases of Gill and McMahon v. Vogeler,52 Md. 663, and Lynn v. B. O.R.R., 60 Md. 411, in conflict with our conclusion, the distinction between both those cases and the present, being obvious when examined. Nor do we think that the question whether the city was in default by reason of non-payment for the July deliveries by September 1st, constituted any "dispute," within the meaning of the contract, as to the "meaning of any of the provisions or clauses of the same." Questions as to the size, kind or quality of the coal delivered, as to the points of delivery, the correctness of weights or analysis, or other kindred questions, would seem to be within the scope of this provision, but not the ultimate legal right of the parties to the enforcement, or the termination of the contract.

It follows from what we have said, that the plaintiffs' first prayer which embraces and clearly states all the facts necessary to warrant a verdict in their favor upon the principle announced and adopted in McGrath v. Gegner, was correctly granted, and that the defendants' first and fourth prayers, which required the liability of defendant to be submitted to the Water Engineer, were properly rejected.

Defendants' second prayer was properly rejected, because it declared analysis of the coal to be a condition precedent to payment, and also because it made plaintiffs right to recover depend upon the finding that the analysis was delayed for the purpose of delaying payment, whereas the failure to make analysis within the prescribed time was sufficient, without regard to the reason of the failure.

In like manner, defendants' third prayer was properly rejected, because the contract in prescribing a specific period for making analysis, excludes any question of due diligence.

The fifth prayer of defendant was defective in submitting to the Court sitting as a jury the question whether the defendants failure to perform its contract, if found as a fact, was sufficient in law to justify the plaintiffs in rescinding the contract on their part.

Finding no error in the rulings of the learned Judge, the judgment will be affirmed.

Judgment affirmed with costs above and below.

(Decided February 11th, 1903.)