Jewett, Bigelow & Brooks v. Detroit Edison Co.

• Decision Date: 17 June 1921
• Docket Number: 3473.
• Citation: 274 F. 30
• Parties: JEWETT, BIGELOW & BROOKS v. DETROIT EDISON CO. [1]
• Court: U.S. Court of Appeals — Sixth Circuit

274 F. 30

JEWETT, BIGELOW & BROOKS v. DETROIT EDISON CO. ^[1]

No. 3473.

United States Court of Appeals, Sixth Circuit.

June 17, 1921

On the 1st day of July, 1916, Jewett, Bigelow & Brooks entered into a contract with the Detroit Edison Company, the important parts of which contract are as follows:

'Witnesseth that the coal company sells and the Edison Company buys twenty thousand (20,000) tons of 6' mine run coal from the Harlan mines, located at Harlan, on the Louisville &amp Nashville Railroad, Kentucky. The coal company agrees and guarantees to ship between the 1st day of July, 1916, and the 20th day of June, 1917, the coal herein mentioned in accordance with the following schedule: * * *

'(1) If during any month or months covered by this contract period, there shall have been mined the amount scheduled, or more tons of coal at the mines mentioned herein, and less than the scheduled tons shall have been shipped to the Edison Company during this period, then the Edison Company shall have the right to charge the coal company as its liquidated damages twenty (20) cents per ton for each ton short in shipping, and the Edison Company may deduct such damages from any moneys due to the coal company.

'(2) If, however, less than the scheduled tons of coal is mined from these mines during any month or months, and all of the coal so mined is shipped to the Edison Company, then no damages shall be charged to the coal company; but it shall be obligatory on the part of the coal company to furnish evidence satisfactory to the Edison Company that less than a total of the scheduled tons of coal was mined, and that all of the coal which was mined was shipped to the Edison Company.

'(3) The Edison Company agrees to accept the full tonnage covered by this agreement, provided same is shipped within the contract period and under the conditions stipulated in the contract or pay liquidated damages in the sum of twenty (20) cents per ton to the coal company for such tonnage as it shall not accept.

'It is also understood and agreed that nothing in this agreement is to relieve the Coal Company from its obligation to ship the Edison Company all or part of the tonnage scheduled for each month provided sufficient coal is mined.'

The contract further provided that the Edison Company would pay to the coal company, for this coal, $1 per ton, f.o.b. mines. On the same day the coal company made a proposition in writing that it would sell to the Edison Company during any month or months within the period of this agreement an additional tonnage of coal from the mine or mines referred to in the agreement, up to 10 per cent. of coal scheduled for that month or months, at the same price and under the same condition as covered by the agreement, provided the Edison Company would notify it 30 days in advance that it would require such additional tonnage.

On the same day another contract, separate and distinct from the first contract herein referred to, was entered into between the same parties, by the terms of which the coal company agreed to sell, and the Edison Company agreed to buy, 30,000 tons of 2' nut and slack coal from the Harvey and Varilla mines, located at Hazard, on the Louisville & Nashville Railroad, Kentucky, at an agreed price of 85 cents per ton, f.o.b. mines, to be delivered within one year from that date in monthly installments specified therein. All the other provisions of this contract are identical with the provisions in the first contract for run of mine coal.

Accompanying this contract there was also a written proposition by the coal company, agreeing to increase this tonnage 10 per cent. upon the same terms and conditions named in the proposition accompanying the first contract. It does not appear that the Edison Company ever gave any orders for additional coal, in accordance with the terms of these two separate propositions; but it does appear that on July 3, 1916, it ordered 1,000 additional tons run of mine coal for July, which order was accepted by the coal company. It further appears that in August another additional 1,000 tons of mine run coal was ordered and accepted, and in the same month an order was placed for 10,000 additional tons to be delivered at the rate of 1,000 tons per month, commencing in September of that year, and continuing for the remaining 10 months covered by that contract. This made a total tonnage of 32,000 tons run of mine to be delivered under the terms and conditions named in the first contract and these three supplemental contracts, and 30,000 tons of 2' nut and slack on the second contract.

The Harlan mines include a large number of mines in Harlan county, Ky., which mines produced a much larger quantity of 6' run of mine coal than the amount named in the first contract, including the 12,000 additional tons. The Harvey and Varilla mines consist of but two mines located near Hazard, Ky. The output of these mines would have been sufficient to produce 30,000 tons of 2' nut and slack had the same been screened; but very little of this coal was screened by the owners and operators of these mines because of the shortage of cars. Jewett, Bigelow & Brooks were not the owners of these mines, and had no control over their operation; they were simply coal brokers who bought from the mine operator and sold to the retailer or consumer.

It appears from the evidence that the plaintiff delivered upon the first contract an excess of the monthly requirements, except for the months of October and November, 1916, and May, 1917. However, it further appears that by agreement between the parties the excess tonnage of run of mine coal shipped during any of these months should be credited upon the nut and slack contract, so that, notwithstanding the coal company shipped substantially the full amount of the run of mine tonnage from the Harlan mines covered by this contract and the supplemental contracts during the year, nevertheless it was short in the scheduled tonnage for these three months.

Upon the second contract for nut and slack the defendant shipped in July, 1917, 139 tons, and in August 445 tons, a total of 584 tons, and no more. The Edison Company brought action against the coal company to recover damages in the sum of $100,000 sustained by it by reason of the breach of these contracts by defendant. This was later increased to $125,000. The declaration averred the making and execution of these two separate contracts, one for 20,000 tons run of mine coal from the Harlan mines; the other for 30,000 tons 2' nut and slack from the Harvey and Varilla mines, and also the three separate contracts covering the additional 12,000 tons of run of mine coal from the Harlan mines, but stated the default as a joint default on both contracts to the full amount of the coal not shipped by the defendant, after first deducting from the tonnage actually delivered the 12,000 tons covered by the supplemental contracts. The defendant, however, made no objection to the averment of one default in gross upon these separate contracts, but pleaded the general issue, and gave notice of several special pleas or defenses, the more important of which will be discussed in the opinion.

Upon the issue so joined the jury returned a verdict for the plaintiff in the sum of $86,850.19, upon which verdict judgment was rendered by the trial court. The plaintiff in error seeks to reverse this judgment upon 7 separate grounds of alleged error; the more important of which will be considered in detail in the opinion in this case.

Hal H. Smith, of Detroit, Mich. (Beaumont, Smith & Harris, of Detroit, Mich., on the brief), for plaintiff in error.

James O. Murfin and James V. Oxtoby, both of Detroit, Mich. (Oxtoby & Wilkinson, of Detroit, Mich., on the brief), for defendant in error.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

DONAHUE Circuit Judge (after stating the facts as above).

It is insisted by the plaintiff in error that this judgment should be reversed for error of the court in holding that the provisions of the contracts relating to stipulated damages gave the Edison Company a right to elect to accept such damages, or to recover its actual damages. The provision of the contract in that respect is not subject to such construction. The term 'liquidated damages' means a definite sum or amount, which has been determined by agreement of the parties or by litigation. At the time this contract was written, these damages had not been ascertained by litigation. Therefore the provision in this contract that 'the Edison Company shall have the right to charge the coal company as its liquidated damages 20 cents per ton for each ton short in shipping' necessarily means that the parties had determined, or believed they had determined, by agreement between themselves, the precise amount of damages the Edison Company would sustain by reason of any failure on the part of the coal company to keep its contract and deliver the amount of coal named therein. Otherwise the term 'liquidated damages' would have no place or meaning in this contract.

The further provision of that paragraph, that 'the Edison Company may deduct such damages from any moneys due to the coal company,' can in no way change or alter the terms of the contract in reference to liquidated damages. The intention and purpose of the parties to ascertain and determine by agreement a sum certain as liquidated damages for a breach of the conditions of this contract by either party further appears by the provisions of paragraph 3 of the conditions written therein, in which paragraph it is provided that, upon the failure of the Edison Company to accept the full tonnage, it would pay to the coal company liquidated damages in the sum of 20 cents per ton for such tonnage as it fails to...