Hibernian Banking Ass'n v. Eckhart & Swan Milling Co.

Mr. Justice Adams

delivered the opinion of the court.

Counsel for plaintiff objects that the notice of set-off filed with the defendant’s plea as amended is insufficient, but merely refers us, without serious argument, to thirty objections made to the notice in the trial court. These objections were fully argued in the trial court and were overruled, and we concur in the ruling of that court. We think the notice amply sufficient to admit of evidence of defendant’s claim of set-off. We are of opinion, after a very careful consideration of the evidence, that the learned judge of the trial court was warranted by the evidence in finding that the plaintiff failed to perform its contract, and that the defendant, under the facts in evidence, had the rig’ht to purchase coal in the open market to meet the requirements of its plant. At least it cannot, as we think, be truly said that the finding is manifestly against the weight of the evidence. The evidence shows, without contradiction, that in the latter part of November and in December, 1902, and January, 1903, the market price of coal had materially advanced, so as to be much above the price fixed by the contract between the parties; and it was clearly the defendant’s interest to procure coal from the plaintiff under the contract between them, if possible. There was absolutely nothing to be gained by defendant by purchasing from other parties in the open market, unless compelled to do so by plaintiff’s failure to supply it with coal. On the contrary, by so doing it was necessary for it to pay a much higher price for the coal than if supplied with it by the plaintiff under the contract.

Plaintiff’s counsel contends that the defendant was first in default in the performance of its contract, and therefore not entitled to recover for plaintiff’s default, if any, either in a direct suit or by way of set-off. The basis of this claim is that defendant failed to pay for coal included in plaintiff’s amended bill of particulars, of the value of $578.80, at the contract price of $1.28 per ton. The plaintiff’s bill of particulars, the correctness of which is not questioned, shows coal .shipped by plaintiff to defendant October 15, November 26, December 1, December 5 and December 10, 1902. The evidence for defendant tends to prove that the coal shipped October 15th was unloaded and weighed by defendant October 22nd, and 'of that shipped November 26th, some was unloaded and weighed December 1, some December 4, 1902, and some January 12, 1903, and that coal shipped December 1, 1902, was unloaded and weighed December 2nd, 3rd, 5th, 12th and 18th. Coal shipped December 5th was unloaded and weighed December 8th, and coal shipped December 10th was unloaded and weighed December 13th, 15th, 16th and 19th. All of the aforementioned coal, except that shipped October 15th, was received, unloaded and weighed by the defendant about the time defendant became fearful that the plaintiff would fail to perform its contract. Mr. Eckhart testified that in the latter part of November and early part of December, 1902, defendant’s supply of coal was inadequate; that there was not coal enough in sight, which defendant could get, to keep its plant in operation, and it was in constant fear of being obliged to shut down. Also defendant’s letter to plaintiff of December 4th, stating that defendant was “running very low on coal,” and requesting immediate shipment, and plaintiff’s answer of December 6th to that letter, saying, among other things, “Begret. your running low on coal. You must have ‘phoned coal men and found their situation same as ours. Blame lies with railroads,” etc., are evidence that defendant was not supplied with coal as required by the contract. Under these circumstances, we are inclined to the view, which we think must have been that of the trial court, that the defendant was warranted not only in purchasing coal in the open market, but in withholding payment for that already received by it while it remained doubtful whether the plaintiff would furnish it with coal as per contract. In plaintiff’s letter of December 6th it substantially admits its inability to fulfill its contract, and in its letter of December 23rd it seems to authorize defendant to get coal in any possible way. Mr. Schaeffer, plaintiff’s secretary and treasurer, testified that defendant was in the habit of sending statements of weight of coal received and remitting by check twice a month, to which no objection appears to' have been made. Mr. Cooke, plaintiff’s assistant manager, testified that he never doubted the defendant’s financial responsibility, and Mr. Eckhart testified that during the months of December, 1902, and January, February, March and April, 1903, the defendant was always ready and able to pay any bill it owed. The snit was brought April 23, 1903, without any previous demand for payment. Before suit brought plaintiff sent two bills to defendant, both for mine run coal—one for $2.60 and one for $3 per ton, which defendant was under no obligation to pay, as is practically admitted by plaintiff, in amending its bill of particulars, charging $1.28 for mine run coal. The question to be decided is one of law, viz: Whether defendant’s omission to pay for the coal, shown in plaintiff’s second amended bill of particulars, is a default which precludes a recovery by defendant on its notice of set-off and the evidence in support thereof. Neither party attempted to rescind the contract, and the defendant never intended to abandon it, as is evidenced by its letters to the plaintiff insisting on plaintiff’s fulfillment of the contract. Neither did the defendant intend to violate the contract by withholding payment for coal delivered to it in pursuance of the contract. This is evidenced by the fact that, December 4, 1902, it sent to plaintiff a check for coal received by it from November 1st till November 15th. This the plaintiff received,, without objection that the October coal, which defendant unloaded and weighed October 22nd, had not been paid for. The defendant had no apprehension of non-payment for coal delivered in pursuance of the contract, and evidently acquiesced in the defendant’s manner of payment. The sending to defendant bills for mine run coal at $2.60 and $3 per ton, if considered as a demand for payment, was a demand which the plaintiff had no lawful right to make, in view of the contract. It is evident from the plaintiff’s letter of January 6, 1903, that it then regarded the contract in force, notwithstanding payment for coal received by the defendant prior to that date had not been made. See Bollman v. Burt, 61 Md. 415, 422.

In West v. Bechtel, 125 Mich. 144, the plaintiffs were coal and wood dealers in Grand Rapids, and the defendant was a dealer in wood at Menton, Michigan. The parties made a contract January 14, 1899, by which the defendant agreed to sell to the. plaintiffs 400 cords of wood at one dollar per cord, free on board car at Manton, the defendant agreeing to ship right away, and plaintiffs agreeing to remit as fast as the wood would “come in.” Three carloads were shipped by the defendant, and two were paid for by the plaintiffs, when, February 24, 1899, the plaintiffs wrote to the defendant, saying, “Tour conversation over telephone day before yesterday confirms our idea that you did not intend to fill contract,” adding that, though the price had materially advanced, they would expect the wood, and would be seriously damaged if it should not be shipped. February 28, 1899, the defendant wrote to the plaintiffs, saying that plaintiffs had agreed to pay for wood as fast as it came in; that defendant had shipped a car to them February 4th, which they had admitted, on February 21st, they had received two weeks before that date, and which they had not paid for, and threatened to sue if not paid. There was evidence tending to prove that in the conversation by telephone defendant asked the plaintiffs, “When are you going to pay for that?” and the plaintiffs answered, “We will pay for that when we get some more,” and defendant replied that plaintiffs would have to pay for that before they would get any. There was evidence that the price of wood had advanced since the making of the contract to $1.40 per cord, and that the defendant was offering to sell and sold wood at that price. Plaintiff sued the defendant for breach of the contract in refusing to deliver the wood contracted for. The trial court instructed the jury as follows:

“A contract of this character might be broken up by either party. A refusal to pay—nonpayment according to the terms of the agreement—might, under certain circumstances, constitute such a breach of the contract as would release the other party, and a refusal to deliver might be such a breach of the contract on the part of the defendant as would release the other party, or give him a cause of action. But the particular circumstances connected with the case oug’ht to be taken into consideration. The mere refusal to pay for a portion of the property delivered until more was received would not alone constitute such a breach of the contract as would warrant the other party, the defendant, in repudiating the entire contract, but, to warrant the defendant in refusing further to perform his part of the contract by delivering the wood which he had contracted to deliver, it ought to be made to appear that there was not merely a refusal to pay at once for the portion already delivered, but the circumstances connected with the whole matter, the conduct of both parties, ought to be taken into consideration, and it should be made to appear, to warrant the defendant in refusing further to deliver, that the conduct of the plaintiffs was such as indicated that they did not intend to perform their part of the contract.”

Error was assigned on the instruction, but the reviewing court, in a very thorough and exhaustive opinion, citing numerous English and American cases, sustained the instruction, and affirmed a judgment for the plaintiff. The court cites Mersey Steel & Iron Co. v. Naylor, 9 Q. B. Div. 648, 9 App. Cases 434, in which it is said, “The true question is whether the acts and conduct of the party evince an intention no longer to be bound by the contract.” The court also cite Blackburn v. Reilly, 47 N. J. L., 290, in which case, p. 308, the court say: “In our opinion, the rule established in England by the judgment of the House of Lords in Mersey Steel & Iron Company v. Naylor, 9 App. Cas. 434, affirming the judgment of the Court of Appeals in S. C., 9 Q. B. D. 648, is one which in ordinary contracts of this nature, will work out results most conformable to reason and justice. The rule is, that defaults, by one party in making particular payments or deliveries will not release the other party from his duty to make the other deliveries or payments stipulated in the contract, unless the conduct of the party in default be such as to evince an intention to abandon the contract or a design no longer to he hound by its terms.” See also Winchester v. Newton, 2 Allen 492. In that case the court distinguished between a mere omission to pay and an unqualified refusal to pay. In the present case time of payment is not of the essence of the contract; the plaintiff acquiesced in the manner of making payment adopted by the defendant, and some of the coal sued for by defendant was delivered to the defendant after payments for former deliveries were due. There was no refusal to pay, and no demand for payment except the suit, and the defendant has not, by its acts or conduct, evinced any intention no longer to be bound by the contract, or not to pay for coal delivered to it, and now, when for the first time demand has been made, the defendant offers to pay the contract price for coal delivered to it by plaintiff, by crediting plaintiff with it on the amount which it was obliged to pay others for coal, by reason of the plaintiff’s manifest default, seeking only to recover the excess of what it was so obliged to pay over the contract price. We think this reasonable and just.

We find no error in the court’s rulings on propositions of law requiring reversal of the judgment. The judgment will be affirmed.

Affirmed.