B. FERNANDEZ & HNOS., S. EN C. v. Rickert Rice Mills, Inc.

• Decision Date: 08 May 1941
• Docket Number: No. 3619.,3619.
• Citation: 119 F.2d 809
• Parties: B. FERNANDEZ & HNOS., S. EN C., v. RICKERT RICE MILLS, Inc.
• Court: U.S. Court of Appeals — First Circuit

119 F.2d 809 (1941)

B. FERNANDEZ & HNOS., S. EN C., v. RICKERT RICE MILLS, Inc.

No. 3619.

Circuit Court of Appeals, First Circuit.

May 8, 1941.

L. E. Dubon, of San Juan, P. R. (Dubon & Ochoteco and Otero Suro & Otero Suro, all of San Juan, P. R., on the brief), for appellant.

Walter L. Newsom, Jr., of San Juan, P. R. (Henri Brown, of San Juan, P. R., on the brief), for appellee.

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

MAHONEY, Circuit Judge.

This is an appeal from a judgment of the District Court of the United States for Puerto Rico for the plaintiff in the sum of $4,250 with interest.

The action arises out of a written contract for the purchase and sale of rice entered into September 25, 1939, between the plaintiff, Rickert Rice Mills, Inc., hereinafter called the seller, a corporation incorporated under the laws of the State of Louisiana, with its principal offices located in the City of New Orleans in that State, and the defendant, B. Fernandez & Hermanos, Sucesores, S. en C., hereinafter called the buyer, a limited partnership organized under the laws of Puerto Rico, with its principal offices in San Juan.

The form of contract used was the standard Puerto Rican contract of the Rice Millers' Association, which has been used since August 1, 1932. The relevant portions of the contract are as follows:

"Porto Rican Contract of The Rice Millers' Association "Effective August 1st, 1932

"San Juan, P. R., Sept. 25, 1939

"Rickert Rice Mills, Inc., New Orleans, La. hereby sells and agrees to deliver, and B. Fernandez & Hno. San Juan, the undersigned buyer, purchases and agrees to pay for the following described merchandise:

This space Quantity 100-1b Sample Numbers Price C.I.F. Grades for Seller's double pkts. (Sacks inc.) Variety Memorandum Brands 1,000 single EXTRA FANCY Etc cotton bags ARKANSAS JAPAN $4.25 Clean Rice rice coated R.M.A. — Certificate to be final as to quality grade and conditions. Delivery C.I.F. — San Juan, P.R Time of Shipment. — First half November. — Primera quince noviembre.¹

* * *

"This agreement is made upon the terms and conditions above set forth, and those printed on the reverse side hereof, with all of which the parties hereto are familiar and agree to.

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"Accepted and confirmed: San Juan, P.R., Sept. 25, 1939

"Rickert Rice Mills, Inc.,—R. Fabregas. "By:—(Signed) R. Fabregas, (Seller) "B. Fernandez & Hnos. "By:— (Buyer)

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(over)

On the reverse of this Contract, the following appears

"Terms and Conditions of the Contract

"(a) The terms and payment of purchase price shall be net cash against draft, with bill of lading and marine insurance certificate attached, sellers order, notify buyer, draft to be paid promptly on arrival and examination of goods, but not to exceed five (5) business days after goods have been discharged from ship, unless written request for arbitration is made as provided below.

"(b) Examination and Approval. — Buyer shall have the right of inspection of goods on arrival, but shall exercise this right within three (3) business days after goods are discharged from ship; failure to inspect within three (3) business days, acts of God excepted, forfeits all rights to complaint and goods shall be accepted and paid for at full invoice price.

"(c) Notice. — After buyer or his representative has exercised his right of inspection within three (3) business days after goods are discharged from ship as provided above, should the buyer find fault with the delivery he agrees to notify the seller's agent immediately in writing, a copy of said notice to be filed with the Rice Millers' Association at San Juan, and if the seller through his agent, or representative or both, and the buyer are unable to agree, the question in dispute shall be arbitrated.

"(d) Arbitration. — Both buyer and seller hereby agree to submit all questions of quality, complaints, disputes and/or controversies that may arise out of or in connection with this contract, in the following manner: the buyer agrees to file written request for arbitration with the secretary of the Chamber of Commerce of Porto Rico, * * * within five (5) business days after goods have been discharged from ship, and further agrees to file a copy of said request with the seller's agent and one copy with the Rice Millers' Association at San Juan within the same period of time. Failure to request arbitration in the manner specified within five (5) business days after goods are discharged from ship, forfeits all right to complaint and goods shall be accepted and paid for at full invoice price. * * * Buyer and seller both agree that samples submitted for arbitration are to be drawn by the Rice Millers' Association representative from ten (10%) Per Cent of the entire lot of rice being arbitrated, * * * The Secretary of the body holding the arbitration will immediately notify the buyer, the seller's agent, and the Rice Millers' Association, San Juan office, in writing, of the findings of the arbitration committee, and a copy of the certificate furnished each. The buyer agrees to accept and pay for the merchandise in accordance with the findings of the arbitration committee of first instance, immediately on receipt of notice of the finding of said committee, providing that the allowance made is not over one-fifth of one cent per pound. If the allowance is over one-fifth of one cent per pound, the buyer shall declare within twenty-four (24) hours his intentions either to accept the shipment at the allowance made, or require that another shipment be made as provided herein, subject, however, to the buyer or the sellerssicright of appeal, as provided herein, it being understood that the case is not to be reopened or reheard in Porto Rico, but is subject only to an appeal as provided below. * * * Either party may appeal from the decision of the arbitration committee of first instance within three (3) business days after receipt of notice of decision. In case of an appeal, the Secretary of the body before whom the arbitration of first instance was held shall send the sealed samples to the Secretary of the Rice Millers' Association, or to the New Orleans Board of Trade at the option of the appealing party for a rehearing and final decision.

"Both the buyer and seller agree to accept as final the decision of the appeals committee and to abide by said decision, and agree further that final settlement will be made immediately upon receipt of notice of appeal decision. In case of arbitration for difference of grade where the difference is not over one-fifth of one cent per pound, the buyer shall accept the goods at the allowance. If the difference amounts to more than one-fifth of one cent per pound, the buyers shall have the option to accept the goods at the allowance made by the appeals committee or to require that another shipment be made, as provided herein above, or to consider the contract discharged and terminated, the money to be returned to buyer with interest at eight per cent (8%) per annum, plus accrued insurance and storage charges. Where the buyer exercises his right for another shipment, he shall immediately notify seller, who shall make shipment within fifteen (15) days from date of receipt of notification subject, however, to the final decision of the appeal committee as herein provided. Differences in quality and all other differences as regarding the terms of this contract, including time of shipment, shall be arbitrated before the Chamber of Commerce of Porto Rico * * * and can be reopened or reheard only by the appeal committee as provided in this contract.

* * *

"(f) Sales on Samples. — Where sale of rice is made on type or sample, seller, or his representative, shall leave with buyer at the time of offer a sealed sample representing the rice on which the sale is made, which sealed sample shall not be opened except upon complaint as to quality after inspection of goods by buyer, and then only in the presence of seller, or seller's representative.

"(g) Sales on Description. — When rice is sold on grade or description it is understood that the grades and their specifications shall be those given in U. S. Department of Agriculture Circular No. 291 and/or its amendments. Rice Millers' Association Certificates, when furnished, shall be final as to quality, condition and grade.

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"(m) The printed terms of this contract may not be varied, altered, or amended under any condition." (Italics supplied.)

The lower court made findings of fact and conclusions of law which may be summarized as follows:

The seller shipped certain rice by steamer November 4, 1940, which duly arrived in San Juan. Immediately after the discharge of the rice from the ship it was examined by the buyer. The latter thereupon notified the seller in writing that it refused to accept or pay for the rice which had been shipped because it was "Fancy Japan" rice and not "Extra Fancy Japan" rice as had been ordered, and that therefore it was not bound to accept and pay for it. The certificate of the Rice Millers' Association which was furnished by the seller pursuant to the contract showed the grade of the rice shipped to be "Fancy Japan Milled Rice" which is a grade inferior to "Extra Fancy Japan" rice.

The seller maintained that even though the Rice Millers' Association certificate showed the rice shipped to be of an inferior grade or quality, the buyer was required by the contract to submit to arbitration the question of the difference in value between the rice ordered and that shipped. If the difference were one-fifth of a cent per pound or less, the seller claimed that the buyer had to accept it at the allowance made. On the other hand, the buyer insisted that the contract made the certificate of the Rice Millers' Association conclusive and that the contract did not require it to submit the question of difference in value to arbitration or to accept an inferior grade of goods at an...