617 F.2d 355 (4th Cir. 1980), 78-1141, Brunswick Box Co., Inc. v. Coutinho, Caro & Co., Inc.

Docket Nº:78-1141.
Citation:617 F.2d 355
Party Name:BRUNSWICK BOX COMPANY, INC., Appellant, v. COUTINHO, CARO & CO., INC., Appellee.
Case Date:March 17, 1980
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 355

617 F.2d 355 (4th Cir. 1980)

BRUNSWICK BOX COMPANY, INC., Appellant,

v.

COUTINHO, CARO & CO., INC., Appellee.

No. 78-1141.

United States Court of Appeals, Fourth Circuit

March 17, 1980

Argued March 8, 1979.

Page 356

Braden Vandeventer, Jr. and John B. King, Jr., Norfolk (Vandeventer, Black, Meredith & Martin), Norfolk, Va., for appellant.

James A. Howard and E. Leslie Cox, Norfolk, Va. (Breeden, Howard & MacMillan), Norfolk, Va., for appellee.

Before RUSSELL and WIDENER, Circuit Judges, and ROBERT R. MERHIGE, Jr., United States District Judge for the Eastern District of Virginia, sitting by designation.

MERHIGE, District Judge.

Brunswick Box Company, Inc., (hereinafter "Brunswick") has appealed from an order of the district court directing a verdict for defendant-appellee Coutinho, Caro & Co., Inc. (hereinafter "Coutinho") on the bulk of Brunswick's breach of contract claim. 1

Coutinho, a trading organization incorporated under the laws of the State of New York and involved in international trade, deals in a variety of commodities, including steel, chemicals and paper. In the Fall of 1975, Coutinho prepared a bid to supply stevedoring pallets to the Republic of Venezuela. In the latter part of 1975, representatives of Coutinho met with Lee Miller, a broker employed by Industrial Forest Products Company of Baltimore, Maryland, (hereinafter "Industrial"), seeking his assistance in fulfilling their pallet requirement. Industrial is not a manufacturer of pallets, however, and Mr. Miller subsequently contacted Brunswick, a Virginia corporation with its principal place of business in Lawrenceville, Virginia, to ascertain if Brunswick would manufacture the pallets.

In January 1976, Brunswick's president, Emory Lucy, its secretary/treasurer, Charles Lucy, the Lucys' attorney, a representative of Coutinho, and Lee Miller, met at Industrial's offices in Baltimore, Maryland. Thereafter, the parties prepared a proposed agreement by which Brunswick would supply Coutinho with "95,000 pallets at $9.95/each, F.A.S. Port, Norfolk, Virginia area."

On January 28, 1976, a second meeting was held at the offices of Brunswick. Lee Miller, Emory and Charles Lucy, and the Lucys' attorney were again present. Coutinho vice-president Paul Niebisch, the person responsible for Coutinho's export operations, attended the meeting and brought with him a proposed agreement which had been prepared by Coutinho. Though the parties modified certain sections of the proposed agreement, no substantive change was made in the language "$9.95 per pallet F.A.S. Norfolk, Virginia"; and this language appears in the parties' final written agreement.

The parties' written contract was dated January 27, 1976, and contained provisions requiring the posting of irrevocable letters of credit by both Brunswick and Coutinho. Under the agreement, Brunswick could claim against Coutinho's letter of credit, after the delivery of minimum quantities of 5,000 pallets, by presenting a dock receipt, commercial invoice and certain other documentation. Brunswick was required to, and did establish a letter of credit to Coutinho, in the nature of a performance bond, in an amount equal to 15% of the contract price.

Following a mid-February, 1976 meeting at which the parties finalized their letters of credit, Brunswick commenced manufacturing the pallets. As of that time, however, Coutinho had not determined where in the Norfolk area Brunswick was to deliver the pallets, although the Lucys testified that at each of the meetings it was agreed that Brunswick's obligations would cease

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once the pallets reached the port. In early 1976, Coutinho's agents, Jack Wollman and Bernard Leyden, contracted with Lambert's Point Docks, Inc., Norfolk, Virginia, for the unloading of pallets from Brunswick's trucks, and for the storage and subsequent loading of those pallets onto vessels, at a cost of $5.50 per net ton. Lambert's Point Docks' agents had no discussion with Brunswick concerning these charges; Lambert's Point's dealings were solely with agents of Coutinho.

After Brunswick, pursuant to Coutinho's direction, delivered its first loads of pallets to Lambert's Point terminal, Brunswick president, Emory Lucy, received a bill from Lambert's Point for transfer and unloading charges (which had been sent to Coutinho, and upon its instruction, redirected to Brunswick). Lucy, however, contacted E. N. Kelley at Lambert's Point and advised him that the charges were for Coutinho's and not Brunswick's account. Kelley then forwarded the unloading and transfer bill to Coutinho. Coutinho paid the bill, but emphasizes that had it not done so the pallets would not have been placed on board the ship which was then at the berth waiting to be loaded.

Thereafter, Coutinho paid all the Lambert's Point tariff charges for unloading, storage, and transferring the pallets delivered by Brunswick.

Shortly before the expiration date of Brunswick's letter of credit, and after Brunswick had delivered all pallets called for under the contract, Coutinho made a claim upon the Brunswick letter of credit for $52,237.50, which Brunswick had refused to pay, for the tariff, unloading and transfer charges. The bank paid Coutinho the full $52,237.50, based upon Coutinho's sworn statement that Brunswick had not complied with the terms of the parties' contract and had not paid the Lambert's Point unloading and transfer charges.

Brunswick thereafter filed its breach of contract action, alleging that "it was specifically agreed by the parties that all handling charges, demurrage, etc., including the cost of unloading the pallets at the place of delivery, were not the responsibility of plaintiff, but rather were to be paid by defendant." Plaintiff asserted that, by making a claim and receiving payment of $52,237.50 against the letter of credit for reimbursement of the unloading and transfer payments, Coutinho had breached the parties' agreement.

At the conclusion of the plaintiff's evidence, upon motion of the defendant, the trial court directed a verdict for defendant Coutinho, concluding that the January 27, 1976 contract represented the parties' final agreement; that the contract required plaintiff Brunswick to ship the pallets "F.A.S. Norfolk, Virginia", and that the meaning of the term "F.A.S.", in light of the custom in the port of Norfolk, clearly required Brunswick to pay the pallet unloading charges. The trial court held that the evidence at trial which plaintiff Brunswick had introduced, as to what the parties intended by the use of the term "F.A.S. Norfolk", only served to contradict the clear meaning of the written wording of the contract, and was therefore inadmissible under the Parol Evidence Rule, Va.Code § 8.2-202. 2

In its appeal from the judgment of the district court, Brunswick asserts that there are dual reasons why the district judge erred in directing a verdict for defendant Coutinho. First, Brunswick contends that the contract term "F.A.S. Norfolk" is ambiguous,

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and hence the Parol Evidence Rule, Va.Code § 8.2-202 does not bar jury consideration of parol evidence in determining the meaning of that term. Second, and in our view a more viable position, Brunswick contends that even if the term "F.A.S. Norfolk" is clear and unambiguous on the face of the contract, the disputed evidence at the trial regarding the parties' course of performance created a factual issue as to the meaning which the parties ascribed to that term. We are of the view that Brunswick's position in this regard is well taken and that the trial court erred in holding that there were no jury issues.

This is a diversity action brought in Virginia upon a contract signed and executed in Virginia; the parties recognize that Virginia choice-of-law dictates that the law of Virginia must be applied. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1937); Va.Code § 8.1-105(1).

The central and controlling concern of the parties in this case is whether the buyer, Coutinho, or the seller, Brunswick, must, pursuant to the contract, pay the fee assessed by Lambert's Point Docks for unloading the...

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