Dreifus v. Columbian Exposition Salvage Co.

Opinion by

Mr. Justice Dean,

This suit was begun by foreign attachment, and at the hearing the issue took the form of an action of assumpsit. The cause was sent for trial to E. Hunn Hanson, Esq., as referee, to find facts and apply to them his conclusions of law; in effect, both his findings and conclusions are in favor of plaintiffs, and defendant appeals, alleging he erred in not finding for defendant and certifying a balance in its favor. The findings of fact are so full and so orderly stated by the learned referee, that it would be a useless labor to restate them at length in this opinion. Counsel for appellant accepts as true all the material facts of the referee approved by the court bélow, but he assigns for error the referee’s conclusions from them.

Briefly stated, defendant, in February, 1895, contracted to deliver f. o. b. cars at Chicago, for shipment to Pittsburg, 3,000 tons of sheared steel at 17.50 per ton, the deliveries to be completed by June 30 following, to be paid for in plaintiffs’ thirty day drafts when delivered. At the expiration of the time, neither party had performed to the letter, the contract; shipments continued during the summer, but defendant, alleging a breakdown of its machinery for shearing the steel, made no shipments after the 7th of August, and on the 10th of that month notified plaintiffs that it was impossible to ship sheared steel as provided by the contract. By this time the steel had largely advanced in price over the contract figure; had very nearly doubled. It is not improbable, as plaintiffs allege, that defendant sought to evade its contract obligation; and it is too plain for argument that plaintiffs wanted the steel and did not want a suit against defendant for damages; so, on September 11, L. E. Block, a member of the plaintiff partnership, met Levine, president of defendant company in Chicago; much anger was displayed by both, and suits were threatened, but the interview ended in the making of a hew contract, by which the old one was canceled, and the new one, materially modifying and changing the terms of the old, was agreed upon. The terms of the new one are expressly set out in the two letters of the 12th and 13th of September, one and two days after the interview between Block and Levine. _ These are the letters:

“ Chicago, September 12th, 1895.

“Messrs. Deeifus, Block & Co.,

“Pittsburg, Pa.

“ Gentlemen: In accordance with agreement between the writer and your Mr. L. E. Block, the various contracts between you and this company are canceled and you agree to accept in lieu thereof 200 tons of steel scrap 6 feet and under and 900 tons of steel in shape as we bring them to our shears. In all other respects such as to price, delivery, terms of payment, and return of expense bills, etc., the same provisions shall apply as in the contracts which are canceled. Please acknowledge receipt and oblige,

“ The Columbian Exposition Salvage Co.

“per A. Levine, President.”

“Pittsburg, Pa., September 18, 1895.

“ The Columbian Exposition Co.,

“Chicago, 111.

“Gentlemen: Replying to your favor of the 12th same is satisfactory to us. Please have all of this material shipped without further delay.

“Yours respectfully,

“Deeifus, Block & Co.”

Shipments continued under this new contract for months when plaintiffs seized by foreign attachment 101 tons of steel shipped by defendant to Pittsburg, and refused payment of the drafts therefor; then this suit was commenced in Philadelphia by plaintiffs to recover damages for the breach of the old contract. The referee finds thus:

“ The letters of September 12-18 exhibit in the clearest way that it was the expressed purpose of the parties to end their rights under the contract of BYbruary 8, 9, 12, and in place of them, to substitute the September agreement.”

But on this established fact, the referee concludes thus: “ . . . . There was no valuable consideration for the agreement. Since the plaintiffs invoke the strict legal principle, it is decided that after the breach of the BYbruary contracts, there could be neither the substitution of another, nor its cancelation, neither its release nor discharge without a valuable consideration for it.”

Hence his finding for the plaintiffs. He states the general rule of law correctly, when he says :

“ It is true that even after a breach of contract, a debtor, by-paying to his creditor but a part of his debt, may have a valid discharge of all, if there was doubt as to tbe amount due, or if that which was due is unliquidated, but not otherwise. . . .

“ In this case the debt was capable of exact ascertainment by calculation .... and that which was due was not unliquidated.”

The opinion of a lawyer, of the learning and ability of the referee, has moved us to a careful revision and consideration of his report; after the most mature deliberation, we are clearly of the opinion he erred in his application of the law to the facts found by him. Assume, as he does, that at the personal interview between Block and Levine on the 11th of September, there was a distinct declaration by the latter that his company would not perform its "contract; still if anything can be clear, it is, that above all things, plaintiffs did not want a lawsuit for damages ; at that stage, their damages were wholly uncertain, depending on the fluctuating price of steel; they did know they wanted the steel; what damages they might want by reason of defendant’s breach, or what they might sustain,' they did not know. In this dilemma, they sought for and obtained a new contract expressly canceling the old. They did not accept a less sum than the money due on a debt certain in amount, a contract which under the authorities would have been without consideration ; they agreed to accept a fixed quantity and quality of merchandise at fixed times and prices, instead of the uncertain event of a lawsuit. ■ It in no way changes the character of the contract of September 11, 1895, that, now, long after the event, the referee, can under the terms of the old contract, to his satisfaction, with approximate certainty, liquidate the damages occasioned by the breach. How did matters stand, then, with the uncertainty of the steel market on that day ? That was the question in contemplation of both parties. In McNish v. Reynolds, 95 Pa. 483, we held, “ that the mutual, unexecuted undertakings of an existing contract are a sufficient consideration for the cancelation of such a contract, and the substitution of a new one with different terms.” It is immaterial, if, for a moment during the interview, there was technically a breach by defendant ; by the new agreement, both treated the old one as an existing contract, and mutually agreed to a rescission of it.

And even taking the most rigid statement of the rule invoked by the referee, that rule reaches no further than stated by Shakswood, C. J., in Bank v. Huston, 11 W. N. C. 389:

“ It may be considered now well settled in this state, that payment of a part of an undisputed debt after it is due, though accepted in full, is not a good accord and satisfaction. While this is so, it is equally well settled, that the acceptance of a collateral thing, without regard to its value, is a good accord and satisfaction. In the absence of fraud, the courts never inquire into the adequacy of the consideration of an agreement.”

Assuming that the damages could have been liquidated with certainty at that date, plaintiffs condoned all the wrong defendant threatened, and accepted as full satisfaction, certain merchandise, a collateral thing, steel of a different size, unsheared scrap, at a different price, instead of insisting on payment in money of the sum certain. In Flegal v. Hoover, Hughes & Co. 156 Pa. 276, involving a contract which in all its material features resembles the one before us, our Brother Mitchell, speaking for the Court, says:

“ The parties then came together, agreed upon a settlement, put its terms in writing, which was signed by both, and partly carried out. Such an agreement is not an accord, but a compromise, and is as binding as any other contract. But it was not necessary to the validity of the agreement of May, 1892, that there should have been even a compromise of disputed rights. The parties to a contract may at any time rescind it, either in whole or in part, by mutual consent, and the surrender of their mutual rights is sufficient consideration. That is what the parties did in the present case, and their rights must be determined exclusively by the agreement of May, 1892. . . . The parties have made a final adjustment of all these matters, and the original contract of 1891 is of no further efficacy except as a guide in determining how much was due under it for the logs and bark mentioned in the agreement of 1892.”

The learned referee holds that this contract must be determined by the lex loci, the law of Illinois, but there is no substantial conflict between the law of that state and this, as will be seen by reference to Martin v. White, 40 Ill. App. Ct. Rep. 281, and Bishop v. Busse, 69 Ill. 403. In Insurance Co. v. Detwiler, 23 Ill. App. Ct. Rep. 656, the court says:

“ The term * cancelation ’ of a contract necessarily implies a waiver of all rights thereunder by the parties. If after breach by one of the parties, they agreed to ‘ cancel ’ it and make a new contract with reference to its subject-matter, that is a waiver of any cause of action growing out of the original breach, and this is the rule even though the original contract was under seal.”

As to the attachment proceedings on the 104 tons of iron in Pittsburg, delivered on the second contract, we think, as the court there had jurisdiction before suit was entered here on the old contract for damages, it is best that that court should retain jurisdiction in that matter until final judgment. It would not be conducive to orderly litigation to import that question into this issue.

But for the reasons given, the judgment of the court below in this case is reversed, and judgment is entered for defendant.