Schminke Milling Co. v. Diamond Bros.

• Decision Date: 14 November 1938
• Docket Number: No. 11235.,11235.
• Parties: SCHMINKE MILLING CO. v. DIAMOND BROS. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

99 F.2d 467 (1938)

SCHMINKE MILLING CO. v. DIAMOND BROS. et al.

No. 11235.

Circuit Court of Appeals, Eighth Circuit.

October 21, 1938.

Rehearing Denied November 14, 1938.

Allan A. Herrick and Richard F. Boyer, both of Des Moines, Iowa (McMartin, Herrick, Sloan & Langdon, of Des Moines, Iowa, on the brief), for appellant.

L. J. Cohrt, of Waterloo, Iowa (B. F. Swisher, of Waterloo, Iowa, on the brief), for appellees.

Before GARDNER, SANBORN, and BOOTH, Circuit Judges.

GARDNER, Circuit Judge.

This is an action brought by appellant as plaintiff to recover liquidated damages on account of the alleged unwarranted cancellation of a contract. It will be convenient to refer to the parties as they appeared in the lower court.

Plaintiff entered into a written contract with the defendant Diamond Brothers, by which it agreed to sell, and the defendant agreed to buy, 5,040 barrels of flour at $5.95 per barrel. In this contract, Schminke Milling Company, of Nebraska City, Nebraska, was designated as seller, and Diamond Brothers, of Cedar Falls, Iowa, was designated as buyer. The contract provided that on directions to be furnished by the buyer, scattered shipments in not less than carload lots were to be made to May 1, 1937, the flour to be transported to Cedar Falls, Iowa. It was recited that the contract "constitutes the complete agreement between the parties hereto; and cannot be changed in any manner except in writing subscribed by Buyer and by a duly authorized officer of Seller." It also contained recital that it was subject to confirmation by the seller at Nebraska City, Nebraska. The contract contained conditions, so far as material to this action, as follows:

"Shipments: Subject to the lien of Seller for the unpaid purchase price, delivery of goods by Seller to the carrier at point of shipment shall constitute delivery to Buyer. Buyer shall furnish Seller shipping instructions with package assortments (and on sales made on a bulk basis, the necessary packages) at least ten (10) days before the time of shipment.

"If there is more than one installment of goods shipped or stipulated herein to be shipped, this contract shall be construed to be severable as to each installment, except where such construction would be in direct conflict with the provisions hereinafter set forth under `Rights of Seller' and `Rights of Buyer,' and breach or default of either Buyer or Seller as to any installment or installments shall not give the other party a right to cancel this contract except as herein otherwise expressly provided.

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"Rights of Buyer: If the Buyer has furnished shipping instructions with package assortments (and on sales made on a bulk basis, the necessary packages) within the time prescribed by this contract, and should Seller then fail to make shipment or shipments within the time specified in this contract, unless for causes beyond Seller's control, Buyer may, as his sole remedy for such breach, exercise one of the following options:

"(a) Cancel the contract as to the portion thereof on which Seller is in default under the provisions of this contract; or

"(b) Terminate the contract as to the portion thereof on which Seller is in default under the provisions of this contract, and within twenty-four (24) hours from such termination (Sundays and legal holidays excluded) purchase an equal quantity of goods of the same kind and grade and recover from Seller as liquidated damages the excess of the price so paid over the purchase price named herein, and in addition thereto, in the case of flour, recover a sum equal to one per cent (1%) of the contract price named herein.

"In case Buyer does not intend to accept any further deliveries under this contract he may so notify the Seller in writing and in such case contract shall be considered terminated as of the date of receipt by the Seller of such written notice; and the amount of Seller's damages will be determined as of date of receipt of such written notice, in accordance with the rule for ascertaining damages on termination of contract by Seller as hereinafter provided under `Rights of Seller.'

"Rights of Seller: As to any of the above goods which have been shipped and which Buyer wrongfully fails or refuses to accept, Seller may resell the same at public or private sale without notice, any time within ninety (90) days after such failure or refusal, and recover from Buyer difference between the above purchase price thereof and the price obtained on resale, if latter be less than former; also all incidental loss and expense, all demurrage, etc., and any carrying charges unpaid on such goods. Resale anywhere in the usual course of Seller's business or at any terminal market or at or near destination shall always be proper and price received conclusive, unless bad faith is clearly proven.

"As to any unshipped flour covered by this contract, should Buyer either:

"(a) Fail to furnish shipping instructions with package assortments (and necessary packages if sale is made on a bulk basis) as herein provided under paragraph entitled `Shipments'; or

"(b) Default in any payment due to the Seller on this or any other contract between the parties; or

"(c) Notify Seller that he does not intend to accept any further deliveries under this contract; or

"(d) Become insolvent or be adjudged bankrupt; or

"(e) Become otherwise legally incapacitated from performing his part of this contract; or if a receiver or Trustee is appointed to take charge of Buyer's business, or in case Buyer is an individual or a partnership, should any change take place in ownership of Buyer's business, then, in any of said events, Seller may:

"(1) Cancel the contract; or

"(2) Terminate the contract as to any unshipped balance, and, for each barrel of flour unshipped, recover from Buyer as liquidated damages a sum to be computed by the following formula:

"(a) One-sixth (1/6¢) cent per barrel per day for each day from date of contract to date of termination; plus

"(b) Twenty (20¢) cents per barrel, as the cost of selling; plus

"(c) Amount of decline, if any, per bushel in the average market price of cash wheat in carload lots at the mill, or basing point (at Seller's option), between date of contract and date of termination, multiplied by four and six-tenths (4.6) times the number of barrels of flour remaining unshipped.

"In case of a rise in such price of such wheat between said dates, Seller shall recover the sums specified in (a) and (b) above, less the amount of such rise per bushel, multiplied by four and six-tenths (4.6) times the number of barrels of flour remaining unshipped. Such rise in such price shall be credited to the amounts provided in (a) and (b) above solely in reduction of damages.

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"Provision for Automatic Extension: If the Buyer shall fail to furnish shipping instructions with package assortments (and necessary packages if sale is made on a bulk basis) to reach the Seller at his main office ten (10) days before the expiration of original contract period, and if the Buyer shall fail to notify Seller that he does not intend to accept any further deliveries under this contract, then (unless the Seller elects to exercise his right to cancel or terminate the contract) this contract shall, without notice, automatically be extended from day to day until Buyer furnishes shipping instructions with package assortments (and necessary packages if sale is made on a bulk basis) in accordance with the provisions of paragraph entitled `Shipments,' or until Buyer notifies Seller that he does not intend to accept any further deliveries under this contract, or until Seller exercises his rights provided herein to cancel or terminate the contract; and for each day during which the contract is thus automatically extended, Buyer will pay Seller carrying charges at the rate of one-sixth (1/6¢) cent per barrel of flour per day, and one (1¢) cent per ton of feed per day."

On trial of the action in the lower court, plaintiff and defendant both introduced evidence. At the close of the evidence, each of the parties moved for a directed verdict in its behalf. The court thereupon discharged the jury and the cause was submitted to the court, who in due time made findings of fact and conclusions of law.

There was no dispute in the evidence. Plaintiff, a Nebraska corporation, owns and operates a flour mill at Nebraska City, Nebraska, and at all times pertinent to this action was engaged in manufacturing and merchandising flour and other mill products. The defendant is a co-partnership, consisting of Samuel L. Diamond and Paul Diamond, both of whom are citizens of the State of Iowa, with the principal place of business of said co-partnership in the City of Cedar Falls, Iowa, and during all the times pertinent to this action this co-partnership owned and operated a chain of forty-two grocery stores in the State of Iowa, through which it sold flour at retail. Following the execution of the contract, defendant began to order shipments of flour according to its needs at its respective stores, and shipments were made as ordered for a number of weeks without complaint. On February 9, 1937, a car of flour was ordered for defendant's store at Traer, Iowa, which was not shipped. Other orders followed, and delays and failure to ship occurred. On April 13, 1937, plaintiff wrote defendant relative to the failure to ship the car to Traer, stating that, "Our mill has been shut down for about two and a half weeks now. We have completely rebuilt our engine and repaired the entire mill. We expect to get started today and will ship your car immediately. We are sorry this order was mislaid." Defendant continued to send in orders for shipments through April and May, some of which were made and some of which were not made. On June 5, 1937, defendant wrote plaintiff, calling its attention to its failure to make a number of shipments, and in that letter, among other things, said: "The...