American Almond Prod. Co. v. Consolidated Pecan S. Co., 348.

• Citation: 144 F.2d 448
• Decision Date: 21 July 1944
• Docket Number: No. 348.,348.
• Parties: AMERICAN ALMOND PRODUCTS CO. v. CONSOLIDATED PECAN SALES CO., Inc.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

144 F.2d 448 (1944)

AMERICAN ALMOND PRODUCTS CO. v. CONSOLIDATED PECAN SALES CO., Inc.

No. 348.

Circuit Court of Appeals, Second Circuit.

July 21, 1944.

Lewis F. Glaser, of New York City, for appellant.

Louis Scherer and Sidney Feldshuh, both of New York City, for appellee.

Before L. HAND, SWAN, and CLARK, Circuit Judges.

L. HAND, Circuit Judge.

The defendant, Consolidated Pecan Sales Co., Inc., appeals from a judgment for damages upon a breach of contract, entered upon an award of arbitrators under § 9 of Title 9, U.S.C.A. The result depends upon the answer to two questions: (1) Whether the arbitrators exceeded their powers as defined by the submission; and (2) whether they should have awarded damages, although no evidence on that issue was presented to them. The controversy arose over a contract for the sale of 30,000 pounds of pecan nuts by the defendant to the plaintiff, executed on August 28, 1942, which provided for shipment "in partial lots at Seller's option starting latter part of November/early December, and running through to June." Printed terms were attached, of which those relevant to this controversy are as follows. Article 9: "The Seller shall have the right to deliver the entire order at one time or in portions from time to time within the time of delivery herein provided." Article 10: "Seller * * * reserves the right to make pro-rata delivery in case of short crops or for any cause or condition beyond the Seller's control." Article 11: "neither the Seller nor his Agents shall be liable for any damages or loss to the Buyer from short, delayed or non-shipment or non-delivery caused by * * * partial failure of crops * * * or other causes, unavoidable or beyond the control of the Seller or his Agents. The Seller or his Agent reserves the right to cancel any such sales for any of said causes." The contract concluded with an arbitration clause.

The defendant delivered 990 pounds of nuts; and on the 16th of January, 1943, advised the buyer that there was a short crop, and that it would be able to make only a pro rata delivery. It offered delivery of twenty per cent of the stipulated amount which it later raised to twenty-five per cent, and which the plaintiff refused, insisting upon full delivery, or at least that the proper pro rata amount was greater. Negotiations proving futile, on March 1, 1943, the defendant demanded "arbitration of the following controversy." It recited Article 11 of the contract, and then proceeded, "Cancellation of the unshipped part of a contract dated August 28, 1942, covering 30,000 Stuarts and/or Schley Pecan Pieces, at a price of 40 ¢ per pound delivered New York, based on conditions in above clause, which is paragraph 11 of the signed contract." On March 23rd, the defendant filed what it described as an amendment to "amplify and clarify" the issues submitted. "We wish a construction of paragraphs 11 and 10 of the conditions on the reverse side of the contract:

"1 — Does paragraph 11 give the seller, for causes enumerated therein, a right to cancel the contract in its entirety?

"2 — If seller had a right to cancel the contract and exercised this right, does it not relieve the seller of any further obligation or liability under said contract?

"3 — Does paragraph 10 give to the seller a right to make prorata deliveries for causes stated in said paragraph?

"4 — If seller had a right to prorate deliveries and exercised its right, and buyer declined to accept, does that not relieve the seller of any obligation or liability under said contract."

On April 21st, the parties stipulated to waive an oral hearing, and that the arbitration should be conducted in accordance with the rules of the American Arbitration Association. That association appointed there arbitrators, who took the oath on May 14, 1943, and on June 29th of that year, rendered the following award:

"1. That the seller did not have the right to cancel the contract in its entirety pursuant to paragraph 11 thereof.

"2. The seller was not relieved from its obligation and liability under said contract, dated August 28, 1942.

"3. The seller had the right to make prorata deliveries pursuant to paragraph 10, for causes stated therein.

"4. The seller neither tendered nor made a proper or adequate delivery to the buyer pursuant to said provisions of the contract.

"5. The claim of the American Almond Products Co. for damages alleged to have been sustained is fixed in the sum of $6,022.80, without interest."

Upon this award the plaintiff moved for confirmation of the award and for judgment upon it, and the defendant countered by a motion to vacate it. The defendant argued that, although the plaintiff in the "statement" of its case to the arbitrators had raised the question of damages, the "statement" had left blank the market values of pecans at the critical dates, and the plaintiff had never submitted any evidence to support its claim except a statement in its attorney's brief that the market price of the nuts "at the time of refusal was 88 ¢ per pound, thus indicating a difference of $12,960.00, the prorated quantity by the difference in sales from market price." The judge held that the arbitrators meant to decide that there was no tender, or adequate or proper delivery, to relieve the defendant of liability, and that their fourth answer was "appropriate" under the circumstances. He further held that the claim for $12,960 damages, made in the attorney's brief, was an adequate basis for the award of damages. He granted the motion to enter judgment upon the award, and denied the motion to vacate it.

Of the grounds for vacating an award in arbitration stated in § 10 of Title 9, U.S.C.A. the defendant can avail itself of only subdivisions (c) and (d), which we shall take up in reverse order. The arbitrators "exceeded their powers," within the meaning of subdivision (d) only in case the submission did not require, or admit of, their fourth and fifth answers. In deciding whether it did, we should not however have regard alone to the four questions propounded to them on March 23, 1943; we must include also the original submission of March 1, of which the four...