Baetjer v. New England Alcohol Co.

• Decision Date: 16 May 1946
• Citation: 319 Mass. 592,66 N.E.2d 798
• Parties: BAETJER et al. v. NEW ENGLAND ALCOHOL CO.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

319 Mass. 592

66 N.E.2d 798

BAETJER et al.

v.NEW ENGLAND ALCOHOL CO.

Supreme Judicial Court of Massachusetts, Suffolk.

May 16, 1946.

Report from Superior Court, Suffolk County; J. Hurley, Judge.

Action by Harry N. Baetjer and others, trustees, against New England Alcohol Company to recover a balance due on a contract for the purchase and sale of molasses. The case was reported by the Superior court without decision.

Judgment for plaintiffs.

Before FIELD, C. J., and QUA, DOLAN, and RONAN, JJ.

R. G. Dodge and T. M. Banks, Jr., both of Boston, and A. W. Scott, Jr., of Cambridge, for plaintiffs.

E. O. Proctor and J. W. Bryant, both of Boston, for defendant.

QUA, Justice.

This action was originally brought to recover the sum of $259,473.19 alleged to have become due and payable by the defendant¹ to the plaintiffs on August 31, 1942, on account for a balance of two million fifty-nine thousand three hundred eleven gallons of Puerto Rican molasses out of a total amount of two million five hundred thousand gallons which the plaintiffs had agreed to sell and the defendant had agreed to buy under a contract in writing entered into between the parties on April 3 of that year. Early in 1944 the molasses in question was sold in accordance with a stipulation of the parties for the same price as that called for by the contract, so that the question now is whether the defendant is liable for interest for not having paid the sum alleged to have become due to the plaintiffs on August 31, 1942. The Superior Court reported the case upon a case stated without making any decision. G.L. (Ter.Ed.) c. 231, § 111.

The plaintiffs have a place of business at Caguas in Puerto Rico. The defendant produces industrial ethyl alcohol at its plant in Everett in this Commonwealth and has required as raw material great quantities of molasses. Negotiations between the parties began in January, 1942. The plaintiffs knew throughout that the defendant was manufacturing alcohol at Everett. The contract as finally agreed upon fixed a price ‘f.o.b. Buyer's vessel’ at the port of Humacao, Puerto Rico.

Under the head of ‘Withdrawals' the contract provided that the buyer (defendant) would take delivery of ‘the molasses sold hereunder’ during the year 1942 in not exceeding five parcels and would give the seller (plaintiffs) at least ten days' notice of the anticipated arrival of each tanker and of the amount to be loaded thereon by the seller. The molasses loaded was to be at the buyer's risk from the time it passed over the rail of the buyer's vessel, ‘except where earlier date is herein fixed for transfer of risk’-a reference, doubtless, to the proposed delivery in the seller's tanks on August 31, 1942, hereinafter mentioned.

Under the head of ‘Pro Forma Payment’ the contract provided that for each shipment prior to August 31, the buyer would make an initial payment of ninety per cent of the seller's ‘pro forma invoice’ upon presentation of the invoice and bill of lading indorsed to the buyer's order at a designated bank in San Juan. (It was provided elsewhere in the contract that the amount of the final payment for each shipment was to be determined, after analysis of the molasses by a methold of calculation elaborately described.) Under the head of ‘Pro Forma Payment’ is also found this important provision, ‘The Buyer will on or before August 31, 1942, accept delivery in tanks of the seller [meaning in Puerto Rico] of all molasses covered by this Contract remaining unshipped.’ Payment on account of ‘such undelivered molasses' was to be made on said August 31, 1942, to the seller by the buyer at the bank in San Juan of ninety per cent of the amount of the seller's ‘pro forma invoice.’ ‘Upon such payment, title shall pass to the Buyer and thereafter such molasses shall be at the risk of the Buyer, but the obligation of the Seller to continue to store during the remainder of the year 1942 and to deliver to Buyer's vessel, as provided under the withdrawals clause, and the right of the Seller to collect the balance of the purchase price shall continue.’

Under the head of ‘Storage’ it was provided that the molasses would be free of storage until shipped.

Under the head of ‘Delivery’ it was provided that the seller would deliver aboard the buyer's vessel at safe anchorage in Humacao Harbor, and it was elsewhere stipulated that the barges ‘to effect delivery to tank vessels' should be provided by the seller.

The contract contained a clause headed ‘Force Majeure’ and reading as follows: ‘Seller will not be liable for any delay in delivery, or failure to deliver, any or all of the aforesaid molasses in case such delay in delivery, or failure to deliver, is caused by labor troubles, strikes, lockouts, war, riots, insurrection, civil commotion, failure of crops of supplies from ordinary sources, fire, flood, storm, accident or any Act of God, or other cause beyond Seller's control. In like manner Buyer shall not be liable for failure to take delivery of the molasses purchased hereunder for any of the above causes which would prevent Buyer's vessel from accepting delivery. But, in any such case, the party claiming the benefit of this article shall use due diligence to remove any such causes, and resume performance hereunder as soon as possible, performance by other party being suspended and excused meanwhile.’

On April 3, 1942, the defendant took delivery at Humacao and later paid for four hundred forty thousand six hundred eighty-nine gallons. The tanker upon which this molasses was loaded was sunk by a submarine the next day. This was the only molasses ever delivered under the contract. The reasons which prevented the defendant from sending other tankers to take delivery are set forth in the case stated as follows: ‘For a long period of time beginning in January, 1942, the defendant made every reasonable effort to arrange for shipments of molasses covered by its contract with the plaintiffs, but on account of war conditions, including the shortage of tankers and destruction by enemy submarines, it was unable to arrange for any shipment except the one on April 3, 1942, above referred to. The defendant applied to the proper officials and government agencies including the War Production Board and the War Shipping Administration for means to transport the molasses in question from Puerto Rico, but was unable to obtain authorization. Defendant at all times acted with due diligence in an effort to secure means of removing the molasses, but was unable to do so through no fault of its own. It was not until the latter part of 1943 that it became possible to ship molasses from Puerto Rico in substantial quantities.’ It further appeared that foreign shipping was not available, and that the difficulties with shipping communication in 1942 were not confined to Puerto Rico but covered the Atlantic Ocean generally.

When August 31 arrived the plaintiffs presented at the bank in San Juan the ‘pro forma invoice’ required by the contract for the two million fifty-nine thousand three hundred eleven gallons not yet delivered and demanded payment of ninety per cent of the amount thereof, or $259,473.19, which sum the defendant refused to pay. Thereafter the plaintiffs held in their tanks the two million fifty-nine thousand three hundred eleven gallons for the account of the defendant until this molasses was sold by agreement of the parties as hereinbefore stated.

The defendant contends, among other things, that the ‘Force Majeure’ clause is a defence to the action. It construes that clause as referring to the ‘delivery’ on August 31 into tanks of the seller of ‘all molasses covered by this contract remaining unshipped’ and as excusing the buyer from taking and paying for such ‘delivery’ on August 31, if any of the casualties mentioned in the ‘Force Majeure’ clause had up to that time prevented its vessel from accepting delivery. It argues that this is the literal meaning of the clause; that shipment and not storage was of the essence of the contract; and that any other construction would result in the defendant receiving practically no protection from the clause, although, as the defendant argues, it afforded substantial protection to the plaintiffs.

There is force in the argument, but after careful study of the contract we are unable to accept the contention. It is necessary to construe the ‘Force Majeure’ clause with reference to the previous clauses of the contract. Under the ‘Withdrawals' clause the buyer was to ‘take delivery of the molasses sold hereunder during the calendar year 1942 in not exceeding five parcels.’ The buyer had the entire year 1942 in which to take delivery, including that part of the year remaining after the so called ‘delivery’ of August 31 into tanks of the seller. Therefore the word ‘delivery’ in the ‘Withdrawals' clause quite plainly includes the loading on the buyer's vessel of the same molasses which for the purposes of passing title and payment was to have been previously delivered into tanks of the seller on August 31. So also the last sentence of the clause providing for the August 31 ‘delivery’ speaks of the obligation of the seller even after that date ‘to deliver to Buyer's vessel.’ Thus it seems that delivery is understood in two senses in the contract. Except in the first sentence of the clause relating to the technical ‘delivery in tanks of the Seller’ on August 31, it means primarily, if not exclusively, the actual loading of molasses upon the buyer's vessel. We think it was used in this sense in the ‘Force Majeure’ clause wherein it was provided that the buyer ‘shall not be liable for failure to take delivery of the molasses purchased hereunder for any of the above causes [war, and so forth] which would prevent Buyer's vessel from accepting delivery.’ We think that the ‘delivery’ for failure to take which the buyer was to be excused was delivery into the buyer's vessel and not delivery into the seller's tanks. It is...