American Sugar Refining Co. v. Blake

The general situation presented by these contracts and by the evidence is not unfamiliar.Napier v. Peoples Stores Co., 98 Conn. 414,120 A. 295; Rosenfield v. Connecticut Fruit CommissionCo., 98 Conn. 428, 119 A. 895. In the Rosenfield case, as in this, the parties had agreed to an indefinite extension of time for performance, by virtue of which it was held that some of the contracts in question were to be treated as open, executory contracts at the date of the receivership, though the original delivery date had passed.

The controlling question in this case is whether on and after March 16th, 1921, the plaintiff was bound to deliver or tender delivery of the sugars contracted for, in order to put the defendants in default. The complaint alleges no delivery or tender, and admittedly none was made. The answer to this question depends, first, on the construction of the written contracts, and, perhaps, on whether all the original rights and duties of the parties under the written contracts were continued in force by the subsequent agreement for an indefinite extension of the time for performance.

Turning to the writings, the issue, when stated specifically, is whether the words, "assortment to be furnished to seller by buyer before September 1, 1920," confer a mere privilege of selection which the buyer might or might not exercise at will, or whether they express an obligation to furnish assortments before September 1st, 1920, in default of which the seller is not bound to ship any sugar at all. Looking at the words used, the phrase "assortment to be furnished to seller by buyer," etc., is no less obligatory in form than the phrase "delivery to be during September," etc.; and elsewhere in the orders and acceptances, the words "to be" are used in the imperative sense, e.g., "this purchase to be invoiced and paid for at contract price;" "all transportation charges to be for the account of buyer."

So far as choice of words determines intent, the furnishing of assortments by the buyer before September 1st is as obligatory as the delivery of the sugar specified by the seller.

On the other hand, it is contended that the furnishing of assortments is not of the essence of the contract because the assortment is "subject to such substitutions as seller may find necessary to make," and as defendants read the contract the assortment may therefore be disregarded by the seller, if furnished. We think, however, that the right of the seller to make substitutions is, on its face, limited to a case where the seller may reasonably find that a necessity exists for doing so. There are fifteen or more different grades and packages of sugar which the buyer might specify, and except for this provision, the plaintiff would theoretically be required to carry in stock or in process fifteen times the amount of sugar called for by its contracts. Practically its experience must enable it to approximately anticipate the demands of its jobber customers; but even so, it is not unreasonable that it should take the precaution of protecting itself against unexpected demands for particular grades and packages of sugar, by a right of substitution to be exercised in case of necessity. We note, in this connection, that the contract makes a clear distinction between the case where the buyer furnishes an assortment, when the seller may make such substitutions as it may find "necessary" to make, and the reserved right of the seller, in case no assortment is furnished, to ship such grades as it has "available." Fairly construed, the contract requires the seller to honor assortments promptly furnished in so far as it is able to do so. It would be unreasonable and inconsistent with the terms of the contract to construe it as giving the buyer a right of selection and then taking it away again. We think that the furnishing of assortments by the buyer is not merely a precatory specification, which the seller may arbitrarily disregard, and that the obligation of the buyer to furnish assortments before September 1st, being expressed in obligatory terms, cannot be treated as without contractual force and effect.

It is further contended that the furnishing of assortments is wholly for the benefit of the buyer, and that a provision wholly for the benefit of one of the parties to a contract may be waived by him. A guarded passage from Williston on Sales is quoted in support of this claim, but the case referred to by Williston is one where the seller gave a warranty coupled with the proviso that if the warranty were broken, the buyer should notify the seller before bringing suit for damages, and it was held that the seller might waive the notice. That is a very different proposition from saying that a promisor may waive the performance of his own promise.

Besides, the furnishing of assortments is for the benefit of both parties. The plaintiff is known as a large refiner of many different grades of sugar, and it is clearly for the plaintiff's benefit that it should be notified thirty days before it is required to make deliveries on its monthly contracts, what grades of sugar its customers desire, in order that it may adjust its refining processes with a view to satisfying the existing and probable future requirements of the trade.

As further illustrating the contractual importance of the buyer's agreement to furnish assortments, it may be pointed out that these are contracts for the sale of unascertained grades of sugar of varying prices per pound, and that no authority is given to the seller to appropriate specific grades of sugar to the contract in gross, except in event assortment is not furnished promptly. For this and other reasons it has been held in one case that contracts of this same form were not enforceable under the statute of frauds because the contract price could not be ascertained without going outside of the written order signed by the buyer.Franklin Sugar Refining Co. v. Howell, 274 Pa. 190,118 A. 109.

We are of opinion that the contracts do not confer on the buyer a mere privilege of furnishing assortments, which he may or may not exercise at will; and that the clause in question is in form and in substance an obligatory covenant to furnish assortments, upon which the seller's covenant to deliver is dependent in order of performance. It follows that the seller's reserved right to ship available grades in case assortment is not furnished promptly is, in effect, as it is in form, "a privilege and not a duty." Franklin Sugar RefiningCo. v. Hanscom Bros., 273 Pa. 98, 116 A. 140.

The result is that on October 1st, 1920, when they applied to the plaintiff for an extension of time, the defendants were already in default, and the plaintiff was entitled under § 4731 of the General Statutes to rescind the contract by giving notice of its election to do so, and sue for damages. And because on that date the period, "during September or as soon thereafter as possible," had not wholly expired within which the plaintiff might ship available grades, it was also entitled to treat the contract as in force and ship or tender delivery to the buyer, and upon the defendants' refusal to accept, to sell for the defendants' account. Plaintiff might then have pursued either one of these two courses at its election.

We come now to the agreement for extension of time evidenced by the letters of October 1st and 2d. These letters may be capable of either one of two constructions: that the agreement simply preserved the statusquo, and the plaintiff consented to carry the unshipped sugar for an indefinite time terminable by either party on reasonable notice; or that the intent was to reinstate all the terms of the original contracts for a like indefinite time. The trial court took the latter view and charged the jury, in a passage already quoted, that all the terms of the contract were extended for purposes of performance. We are of opinion that it makes no difference in the final result whether the agreement for extension is construed one way or the other, because when the period of waiting came to an end, the defendants were still in the position of not having furnished assortments. If the effect of the extension was to preserve the status quo as of October 1st, they were still in default; if it was to reinstate the contracts, they had committed a fresh default. According to Mr. Blake's version of the interview of March 16th, 1921, he asked Mr. Gibson why the plaintiff did not ship, and Mr. Gibson replied that he wanted assortments, to which Mr. Blake responded, in effect, by a request for shipment without assortments. We think this conversation, either alone or in connection with the defendants' failure to comply with the plaintiff's ultimatum of March 24th, must be taken as a definite refusal to furnish assortments, which revived the plaintiff's right to elect either one of its two remedies, supposing that the contracts had been reinstated by the extension of time. See Franklin Sugar RefiningCo. v. Howell, supra, which also discusses the rule of damages applicable where the plaintiff sued without tendering delivery of specific grades of sugar.

Turning to the assignments of error, the trial court, in portions of the charge set forth in paragraphs six, seven and nine, instructed the jury, in substance, that if the defendants, on March 16th, requested shipment, though not furnishing assortments, the plaintiff was bound to ship and could not recover without shipping or tendering delivery. This was error, because the defendants, being themselves in default for failure to furnish assortments, could not make it the duty of the plaintiff to ship by requesting them to do so.

In the portion of the charge set forth in the fifth assignment of error, the court charged as to the clause "assortment to be furnished to seller by buyer before September 1," that "this was a privilege given the buyer, not an obligation imposed on him." This also was error for reasons given. The same must be held as to the portion of the charge complained of in the eighth assignment of error, which instructed the jury that if they found that the defendants, on March 16th, 1920, or at any time, said they were ready to receive the sugar, the plaintiff would have to show delivery or tender to support the allegations of its complaint. The cause of action stated in each count is for defendants' breach of contract by defendants' neglect to furnish assortments and shipping directions, and does not require proof of delivery or tender by the plaintiff. We are also of opinion that the first assignment of error for refusal to charge as requested in the plaintiff's third request, is well taken. We cannot find that the verdicts were against the evidence.

There is error and a new trial is ordered.

In this opinion the other judges concurred.