American Trading Company, a Corporation of State of Maine v. National Fibre And Insulation Company

• Decision Date: 09 April 1921
• Citation: 31 Del. 258,114 A. 67
• Court: Delaware Superior Court
• Parties: AMERICAN TRADING COMPANY, a corporation of the State of Maine, v. NATIONAL FIBRE AND INSULATION COMPANY, a corporation of the State of Delaware

114 A. 67

31 Del. 258

AMERICAN TRADING COMPANY, a corporation of the State of Maine, v. NATIONAL FIBRE AND INSULATION COMPANY, a corporation of the State of Delaware

Superior Court of Delaware, New Castle County

April 9, 1921

Superior Court for New Castle County, March Term, 1921.

SUMMONS case, No. 21, September Term, 1918.

Action by American Trading Company against National Fibre &amp Insulation Company, a corporation of the state of Delaware. On demurrer to second amended declaration. Demurrer sustained.

This action was brought upon agreement alleged to have been made May 7, 1915, between the National Fibre & Insulation Company and the American Trading Company. In the declaration previously filed and demurred to, the plaintiff set forth the agreement in hoec verba and sued for alleged breaches of the agreement by the failure of the defendant to furnish certain materials specified in orders attached to the declaration. See supra, p. 66, 111 A. 290.

The court in its opinion on demurrer to the former declaration recognized that the very strict rule declared in Bailey v. Austrian, 19 Minn. 535 (Gil. 465), has been somewhat modified on account of the growth and exigencies of business and followed the later cases in holding that contracts are not void for lack of mutuality and certainty if in the light of surrounding circumstances the quantity contracted for can reasonably be ascertained or is capable of being approximately ascertained at the time of making the agreement.

The amended declaration as now filed expressly alleges that the plaintiff was "a middleman and distributor of the hereinafter mentioned wares and merchandise and having a regular market in Japan for the sale of the same," and further alleges as follows:

"(1) The character of plaintiff's business is one that has long been established in Japan, it having had a branch established business in that country of about forty years' standing, and it further having had branches established in other parts of the world in and the United States of long standing.

"(2) The plaintiff's business at the time of the signing of said contract was one likely to continue, in that their New York or home office in 1915 employed 100 employees and in that it had ten branch offices in the principal cities of the world. Further than this, it had an authorized capital stock of $ 5,000,000.00 and the total export and import sales for the year 1915 which was transacted by the New York office of plaintiff amounted to over $ 13,000,000.00.

"(3) The defendant knew the consumption or approximate requirements under the contract prior to the signing thereof for the reason that it had knowledge that the fiber ordered under said contract was to be exported by plaintiff to Japan and sold to houses in Japan, and that the defendant, prior to its signing said contract, thoroughly discussed and considered with plaintiff the various points relating to the plaintiff's consumption or approximate requirements."

The defendant has demurred to this amended declaration upon the following grounds:

(A) The said amended declaration and each of the counts thereof, is based upon an agreement which is wholly void for want of mutuality of obligation.

(B) The said amended declaration and each of the counts thereof is based upon an agreement which is wholly void for want of any real consideration to support it.

(C) The said amended declaration and each of the counts thereof is based upon an agreement which is wholly void for uncertainty.

(D) It does not appear from the said amended declaration or any of the counts thereof that the goods ordered by the said plaintiff from the said defendant were within the limits of any certain quantity known to the said defendant prior to the signing of the alleged agreement.

ARGUMENT FOR DEFENDENT ON DEMURRER.

(A) It is true that "mutuality" is one of those inexact terms which sound so well and which mean so many different things that its use confuses more than it aids. It really includes a number of different ideas: (1) The contract may fail to impose any obligation upon the adverse party; (2) the contract may appear to impose an obligation upon each party but by reason of some extrinsic fact no enforceable obligation results; (3) a contract is said to lack mutuality when written evidence which is prescribed by statute is available against one party but not against the other; (4) a contract is said to lack mutuality when some equitable remedy is available to one party and not to the other.

Lack of mutuality as we understand it and as we shall use the term in this brief means the absence of a real, valid, enforceable promise given by one party as consideration for the promise of the other party. Anson on Contracts, 90-94; Page on Contracts, § 564 et seq.

The agreement of the American Trading Company in the present case is to purchase "their entire consumption of vulcanized fiber and insulating papers covering a period of one year from May 7th, 1915, to May 7th, 1916."

Under the earlier cases, such as Baily v. Austrian, 19 Minn. 535 (Gil. 465), such an agreement is void because there is no promise on the part of the American Trading Company to purchase a single dollar's worth of fiber. The company may or may not have any consumption depending upon whether it is advantageous to sell the products mentioned in the agreement. Those who look at the question from a purely academic point of view and who attempt to evolve a doctrine of consideration universally applicable say that any detriment suffered by the promisor is consideration. They say that the promisor is bound not to purchase from any one else that this is a legal detriment; and that the law is not concerned with adequacy of the consideration.

But the law is concerned with the reality of the consideration and a consideration which may be wholly illusory is not a real consideration.

Thus it is held in numerous cases that a contract to take such quantities of an article as the promisor may wish, want or desire is not binding because the promisor may not wish, want or desire any of the article and the whole of the apparent contract is left to his whim or caprice.

Such are the following cases: American Cotton Oil Co. v. Krik et al., 68 F. 791, 15 C. C. A. 540; Rehm-Zeiher Co v. F. G. Walker Co., 156 Ky. 6, 160 S.W. 777, 49 L. R. A. (N. S.) 694; Fitzgerald v. First National Bank of Rapid City, 114 F. 475, 52 C. C. A. 276; Hoffman v. Maffioli, 104 Wis. 631, 80 N.W. 1032, 47 L. R. A. 427; Higbie v. Rust, 211 Ill. 333, 71 N.E. 1010, 103 Am. St. Rep. 204; W. S. Campbell v. A. Lambert & Co., 36 La. Ann. 35, 51 Am. Rep. 1; Drake v. Vorse, 52 Iowa 417, 3 N.W. 465.

There are cases, however, in which the promisor does not expressly agree to take any of the given article, but by reason of his business and the constant demand for such article in that business, the contract is held to be valid. A careful examination of these cases will show them to be based on the following facts:

(a) The commodity contracted for is a mere incident to a large business.

(b) The business is one which will absolutely need the commodity.

(c) The amount of the commodity required is subject to a certain physical maximum.

Among these cases are the following: T. B. Walker Manufacturing Co. v. Swift & Co., 200 F. 529, 119 C. C. A. 27, 43 L. R. A. (N. S.) 730; Lima Locomotive & Machine Co. v. National Steel Castings Co., 155 F. 77, 83 C. C. A. 593, 11 L. R. A. (N. S.) 713; Loudenback Fertilizer Co. v. Tennessee Phosphate Co., 121 F. 298, 58 C. C. A. 220, 61 L. R. A. 402; A. Klipstein & Co. v. Allen et al. (C. C.) 123 F. 992; Marx v. American Malting Co., 169 F. 582, 95 C. C. A. 80; Campfield v. Sauer, 164 F. 833, 91 C. C. A. 304; Sterling Coal Co. v. Silver Spring Bleaching & Dyeing Co., 162 F. 848, 89 C. C. A. 520; Manhattan Oil Co. v. Richardson Lubricating Co., 113 F. 923, 51 C. C. A. 553; Pittsburgh Plate Glass Co. v. H. Neuer Glass Co., 253 F. 161, 165 C. C. A. 61; McCaw Mfg. Co. v. Felder et al, 115 Ga. 408, 41 S.E. 664; El Dorado Ice & Planing Mill Co. v. Kinard, 96 Ark. 184, 131 S.W. 460; East v. Cayuga Lake Ice Line, 21 N.Y.S. 887 ^[1]; E. G. Daily Co. v. Clark Can Co., 128 Mich. 591, 87 N.W. 761; Golden Cycle Mining Co. v. Rapson Coal Mining Co., 188 F. 183, 112 C. C. A. 95; Wells v. Alexandre, 130 N.Y. 642, 29 N.E. 142, 15 L. R. A. 218; Excelsior Wrapper Co. v. Messinger, 116 Wis. 549, 93 N.W. 459; S. B. Smith & Co. v. R. S. Morse, 20 La. Ann. 220; Minnesota Lumber Co. v. Whitebreast Coal Co., 160 Ill. 85, 43 N.E. 774, 31 L. R. A. 529; National Furnace Co. v. Keystone Mfg. Co., 110 Ill. 427.

The foregoing cases depart from the strict and logical rule of the earlier cases on one theory and one theory only, namely: Id certum est quod certum reddi potest.

The physical capacity of a manufacturing plant sets a certain absolute maximum to the amount of the commodity which may be ordered under a contract and the necessity of the business using the commodity as an ingredient or incidental to the business sets a certain though somewhat indefinite minimum. In the case at bar the plaintiff has alleged that it was a middleman, a trader, a buyer and seller, with markets in Japan and elsewhere. It certainly has not been trading in vulcanized fibre for forty years because vulcanized fibre is a comparatively recent product. It may have regarded its markets as well settled but the fact remains that it was not required under the contract to take a single pound of fiber. If it had failed to order any fiber the defendant would have had no cause of action.

It is the very nature of the business of the plaintiff which makes it absolutely impossible to apply any test of certainty to the alleged agreement.

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