William C. Atwater & Co. v. Terminal Coal Corporation

• Decision Date: 03 December 1940
• Docket Number: No. 3621.,3621.
• Citation: 115 F.2d 887
• Parties: WILLIAM C. ATWATER & CO., Inc., v. TERMINAL COAL CORPORATION.
• Court: U.S. Court of Appeals — First Circuit

115 F.2d 887 (1940)

WILLIAM C. ATWATER & CO., Inc., v. TERMINAL COAL CORPORATION.

No. 3621.

Circuit Court of Appeals, First Circuit.

December 3, 1940.

Charles J. Miller, of Boston, Mass., for appellant.

C. Frank Reavis, of New York City (Warran, Garfield, Whiteside & Lamson, John Noble, Jr., and David Stoneman, all of Boston, Mass., and Hodges, Reavis, Pantaleoni & Downey and Martin D. Jacobs, all of New York City, on the brief), for appellee.

Before MAGRUDER and MAHONEY, Circuit Judges, and McLELLAN, District Judge.

PER CURIAM.

In a suit for breach of contract to buy coal, the District Court, after a trial without a jury, gave judgment for the defendant. The judgment must be affirmed for the reasons fully and adequately set forth in the opinion of the District Court, 32 F. Supp. 178.

Considering the wording of the contract, the circumstances of its execution, and the subsequent conduct of the parties, we think the court below was correct in concluding that the contract required the defendant to buy, not a definite tonnage, but its requirements during the year not to exceed 150,000 tons. Defendant took some coal under the contract, but before the period of the contract had expired sold out its assets and good will to the Carter Coal Company and informed the plaintiff that it had no further requirements.

It was found as a fact, upon ample evidence, that the likelihood of defendant's selling out its business during the year was in the contemplation of both parties when the contract was being negotiated; and that was why the buyer was unwilling to commit itself to take a definite tonnage. Therefore it would not be appropriate in this case to read into the contract an implied obligation on defendant's part to continue in business in the usual manner; though in other circumstances and in contracts differently phrased, such an implication might be warranted. Requirements contracts cannot all be lumped together in a single category and given an identical legal effect. See Williston on Contracts, Rev.Ed., § 104A.

The law of New York is conceded by both parties to be controlling here, but we do not doubt that the state courts in New York would have reached the same conclusion as did the court below on the facts in the case at bar. See Petroleum Freight Lines Corp. v. Better Gas & Oil Co., 157 Misc. 1, 282 N.Y.S. 671; In re United Cigar Stores Co., D.C., 8 F.Supp. 243, affirmed, 2 Cir., 72 F.2d 673. Wells v. Alexandre, 130 N.Y. 642, 29 N.E. 142, 15 L.R.A. 218, the main reliance of the plaintiff, presented an "exceptional form of contract." Edison Electric Illuminating Co. v. Thacher, 229 N.Y. 172, 178, 128 N.E. 124, 126. The case is explained in Re United Cigar Stores Co., 2 Cir., 72 F.2d 673, 675. No doubt an obligation of good faith is implied. New York Central Iron Works Co. v. United States Radiator Co., 174 N.Y. 331, 335, 66 N.E. 967. As to this, the District Court was warranted in finding, and did find, that the sale of the defendant's business was not made to defeat the plaintiff's right under the contract in suit, but was made in absolute good faith and for the purpose of preventing further financial losses by the defendant in a losing business.

When the defendant sold out its business to the Carter Coal Company it had on hand certain executory contracts for the resale of coal to its various customers. It appears that these contracts could have been fulfilled in large part by a delivery of the types of coal specified in defendant's requirements contract with the plaintiff. Since defendant's business did...