Sun Printing & Publ'g Ass'n v. Remington Paper & Power Co. 

• Citation: 139 N.E. 470,235 N.Y. 338
• Parties: SUN PRINTING & PUBLISHING ASS'N v. REMINGTON PAPER & POWER CO., Inc.
• Decision Date: 17 April 1923
• Court: New York Court of Appeals

235 N.Y. 338

139 N.E. 470

SUN PRINTING & PUBLISHING ASS'N

v.REMINGTON PAPER & POWER CO., Inc.

Court of Appeals of New York.

April 17, 1923.

Action by the Sun Printing & Publishing Association against the Remington Paper & Power Company, Inc. From an order of the Appellate Division (201 App. Div. 3,193 N. Y. Supp. 698), which reversed an order of the Special Term denying plaintiff's motion for judgment on the pleadings, and granted said motion, defendant, by permission, appeals. The following question was certified: ‘Does the complaint state facts sufficient to constitute a cause of action?’

Order of Appellate Division reversed, and that of Special Term affirmed, with costs in the Appellate Division, and question answered.

Crane and Hogan, JJ., dissenting.

Appeal from Supreme Court, Appellate Division, First Department.

Nathan L. Miller, of New York City, for appellant.

Archibald R. Watson, John M. Harrington, and Ralph O. Willguss, all of New York City, for respondent.

CARDOZO, J.

[1] Plaintiff agreed to buy and defendant to sell 1,000 tons of paper per month during the months of September, 1919, to December, 1920, inclusive, 16,000 tons in all. Sizes and quality were adequately described. Payment was to be made on the 20th of each month for all paper shipped the previous month. The price for shipments in September, 1919, was to be $3.73 3/4 per 100 pounds, and for shipments in October, November, and December, 1919, $4 per 100 pounds. ‘For the balance of the period of this agreement the price of the paper and length of terms for which such price shall apply shall be agreed upon by and between the parties hereto fifteen days prior to the expiration of each period for which the price and length of term thereof have been previously agreed upon, said price in no event to be higher than the contract price for news print charged by the Canadian Export Paper Company to the large consumers, the seller to receive the benefit of any differentials in freight rates.’

Between September, 1919, and December of that year, inclusive, shipments were made and paid for as required by the contract. The time then arrived when there was to be an agreement upon a new price and upon the term of its duration. The defendant in advance of that time gave notice that the contract was imperfect, and disclaimed for the future an obligation to deliver. Upon this the plaintiff took the ground that the price was to be ascertained by resort to an established standard. It made demand that during each month of 1920 the defendant deliver 1,000 tons of paper at the contract price for news print charged by the Canadian Export Paper Company to the large consumers, the defendant to receive the benefit of any differentials in freight rates. The demand was renewed month by month till the expiration of the year. This action has been brought to recover the ensuing damage.

Seller and buyer left two subjects to be settled in the middle of December and at unstated intervals thereafter. One was the price to be paid. The other was the length of time during which such price was to govern. Agreement as to the one was insufficient without agreement as to the other. If price and nothing more had been left open for adjustment, there might be force in the contention that the buyer would be viewed, in the light of later provisions, as the holder of an option. Cohen & Sons v. Lurie Woolen Co., 232 N. Y. 112, 133 N. E. 370. This would mean that, in default of an agreement for a lower price, the plaintiff would have the privilege of calling for delivery in accordance with a price established as a maximum. The price to be agreed upon might be less, but could not be more, than ‘the contract price for news print charged by the Canadian ExportPaper Company to the large consumers.’ The difficulty is, however, that ascertainment of this price does not dispense with the necessity for agreement in respect of the term during which the price is to apply. Agreement upon a maximum payable this month or to-day is not the same as an agreement that it shall continue to be payable next month or to-morrow. Seller and buyer understood that the price to be fixed in December for a term to be agreed upon would not be more than the price then charged by the Canadian Export Paper Company to the large consumers. They did not understand that, if during the term so established the price charged by the Canadian Export Paper Company was changed, the price payable to the seller would fluctuate accordingly. This was conceded by plaintiff's counsel on the argument before us. The seller was to receive no more during the running of the presribed term, though the Canadian Maximum was raised. The buyer was to pay no less during that term, though the maximum was lowered. In the brief, the standard was to be applied at the beginning of the successive terms, but once applied was to be maintained until the term should have expired. While the term was unknown, the contract was inchoate.

The argument is made that there was no need of an agreement as to time unless the price to be paid was lower than the maximum. We find no evidence of this intention in the language of the contract. The result would then be that the defendant would never know where it stood. The plaintiff was under no duty to accept the Canadian standard. It does not assert that it was. What it asserts is that the contract amounted to the concession of an option. Without an agreement as to time, however, there would be not one option, but a dozen. The Canadian price to-day might be less than the Canadian price to-morrow. Election by the buyer to proceed with performance at the price prevailing in one month would not bind it to proceed at the price prevailing in another. Successive options to be exercised every month would thus be read into the contract. Nothing in the wording discloses the intention of the seller to place itself to that extent at the mercy of the buyer. Even if, however, we were to interpolate the restriction that the option, if exercised at all, must be exercised only once, and for the entire quantity permitted, the difficulty would not be ended. Market prices in 1920 happened to rise. The importance of the time element becomes apparent when we ask ourselves what the seller's position would be if they had happened to fall. Without an agreement as to time, the maximum would be lowered from one shipment to another with every reduction of the standard. With such an agreement, on the other hand, there would be stability and certainty. The parties attempted to guard against the contingency of failing to come together as to price. They did not guard against the contingency of failing to come together as to time. Very likely they thought the latter contingency so remote that it could safely be disregarded. In any event, whether through design or through inadvertence, they left the gap unfilled. The result was nothing more than ‘an agreement to agree.’ St. Regis Paper Co. v. Hubbs & Hastings Paper Co., 235 N. Y. 30, 36, 138 N. E. 495. Defendant ‘exercised its legal right’ when it insisted that there was need of something more. St. Regis Paper Co. v. Hubbs & Hastings Paper Co., supra; 1 Williston Contracts, § 45. The right is not affected by our appraisal of the motive. Mayer v. McCreery, 119 N. Y. 434, 440,23 N. E. 1045.

[2] We are told that the defendant was under a duty, in default of an agreement, to accept a term that would be reasonable in view of the nature of the transaction and the practice of the business. To hold it to such a standard is to make the contract over. The defendant reserved the privilege of doing its business in its own way, and did not undertake to conform to the practice and beliefs of others. United Press v. New York Press Co., 164 N. Y. 406, 413,58 N. E. 527,53 L. R. A. 288. We are told again that there was a duty, in default of other agreement, to act as if the successive terms were to expire every month. The contract says they are to expire at such intervals as the agreement may prescribe. There is need, it is true, of no high degree of ingenuity to show how the parties, with little change of language, could have framed a form of contract to which obligation would attach. The difficulty is that they framed another. We are not at liberty to revise while professing to construe.

We do not ignore the allegation of the complaint that the contract price charged by the Canadian Export Paper Company to the large consumers ‘constituted a definite and well-defined standard of price that was readily ascertainable.’ The suggestion is made by members of the court that the price so charged may have been known to be one established for the year, so that fluctuation would be impossible. If that was its character, the complaint should so allege. The writing signed by the parties calls for an agreement as to time. The complaint concedes that no such agreement has been made. The result, prima facie, is the failure of the contract. In that situation the pleader has the burden of setting forth the extrinsic circumstances, if there are any, that make agreement unimportant. There is significance, moreover, in the attitude of counsel. No point is made in brief or in argument that the Canadian price, when once established, is constant through the year. On the contrary, there is at least a tacit assumption that it varies with the market. The buyer acted on the same assumption when it renewed the demand from month to month, making tender of performance at the prices then prevailing. If we...