Brightwater Paper Co. v. Monadnock Paper Mills

• Decision Date: 22 October 1946
• Docket Number: Civil Action No. 1712.
• Citation: 68 F. Supp. 714
• Parties: BRIGHTWATER PAPER CO. v. MONADNOCK PAPER MILLS.
• Court: U.S. District Court — District of Massachusetts

68 F. Supp. 714

BRIGHTWATER PAPER CO. v. MONADNOCK PAPER MILLS.

Civil Action No. 1712.

District Court, D. Massachusetts.

October 22, 1946.

COPYRIGHT MATERIAL OMITTED

Hurlburt, Jones, Hall and Bickford, of Boston, Mass., and Walter J. Donovan, of Adams, Mass. (Damon E. Hall and Philip N. Jones, both of Boston, Mass., of counsel), for plaintiff.

William B. Sleigh, Jr., and Gardner W. Russell, both of Boston, Mass., for defendant.

FORD, District Judge.

This is a suit by the plaintiff, a Delaware corporation, against the defendant Maine corporation, for breach of a series of agreements for the sale by the defendant to the plaintiff of quantities of paper.

A master was appointed to hear this case on November 24, 1942. Hearings were not completed until June 30, 1944. The master filed his report September 17, 1945.

On February 8, 1946, a stipulation was entered into, approved by the court, wherein it was agreed to waive jury trial, that no further evidence was to be offered before the court, aud "the master's report shall be used before the judge at the time of trial in the same manner as though the case were being tried before a jury." Rule 53 (e) (3), Federal Rules Civil Procedure, 28 U.S.C.A. following section 723c, provides that the findings of a master in jury actions are admissible as evidence of the matters found.

The agreements set out in the plaintiff's declaration (this is a removed case), and which the master found were executed by the parties, consist of a so-called main contract dated November 24, 1939, and also various supplemental contracts made on the same day, and other supplemental agreements made at later dates.

The main contract, dated November 24, 1939, provided, in substance, that the defendant would make and sell paper to the plaintiff upon various conditions and at prices to be provided in supplemental agreements. This contract also set forth restrictions against sales by defendant to the plaintiff's customers and provisions for arbitration of disputes concerning quality and prices. In each of the supplemental contracts the defendant agreed to make and sell to the plaintiff a certain style and grade of paper packed in a certain way at certain prices with certain discounts, commissions and freight allowances and to ship the same to a certain destination. There was also a provision in the supplemental contracts stating that they were in amendment of the main contract. There was also the restrictive provision of the main contract in most of these supplemental contracts that the defendant would not sell to Brightwater's customers the type of paper referred to in the contract. Most of these supplemental contracts showed the defendant the names of plaintiff's customers and lines of paper they bought. Some of these customers were customers of the defendant on other lines of paper, and others had formerly been customers of the defendant. The main contract provided the agreement might be cancelled by either party on six months' written notice to the other.

The first count of the plaintiff's declaration alleges that the written instruments declared on, namely, the main contract of November 24, 1939 and the various supplemental contracts, constituted valid and binding agreements, and that the defendant on April 1, 1941 gave the plaintiff notice of cancellation of the contract dated November 24, 1939, by giving it six months' written notice as provided by the contract. The plaintiff alleged further that the defendant repudiated and breached these contracts by notifying the plaintiff on August 28, 1941 (about a month before expiration of the six months' period), that it would not further comply with the terms and conditions of these contracts and would not manufacture and ship paper to the plaintiff on the plaintiff's orders, and thereafter refused to manufacture and ship paper upon the plaintiff's orders pursuant to the contract.

Count 2 alleges that the instruments declared on constituted offers to sell paper to the plaintiff and that before the offers were revoked by the defendant, the plaintiff, relying on such offers, gave the defendant written orders for the manufacture and delivery of paper but the defendant failed and refused to deliver any of the paper ordered under certain of the orders and delivered a portion only of the paper under other orders.

Count 3 alleges that the plaintiff, between April 1, 1941, and August 27, 1941, ordered certain paper in various amounts and at various prices, that the defendant accepted those orders but refused to manufacture and deliver any of the paper ordered under certain orders and delivered only a portion of the paper ordered under other orders.

All counts are for the same cause of action and the plaintiff claimed general and special damages of various kinds in all counts.

The defendant's answer to the three counts will be dealt with later. The defendant in its answer counterclaimed for the plaintiff's alleged indebtedness to it for paper sold and delivered and not paid for.

The master made many detailed and alternative findings. On Count 1 he found for the plaintiff in the amount of $40,395 with interest from October 17, 1941. It was upon this count that the plaintiff relied primarily. Counts 2 and 3 were added by the plaintiff to cover possible situations in the event the plaintiff failed on Count 1.

The master made findings on Counts 2 and 3 and also made alternative findings for both parties on all counts. The master found for the defendant on its counterclaim of $47,884.70 with interest on $38,060.32 from October 20, 1941, and on $9,824.38 from November 20, 1941.

The case with its voluminous record of 2825 pages and almost 1000 exhibits presents to the court at the outset, two questions: (1) On what count, if any, can the plaintiff recover and (2) if it can recover, what are its damages?

The defendant contends the plaintiff cannot recover on Count 1 for the reason that the agreements executed by the parties are unenforceable and void for uncertainty, lack of mutuality of obligation, and failure to meet the requirements of the Statute of Frauds as set out in the Sales Act. Further, it contends the plaintiff cannot recover on Count 2 because of the Statute of Frauds and if it is entitled to recover, its damages are limited to the commissions lost on orders for delivery to plaintiff's customers and the difference between the market and contract prices on accepted orders of paper for the plaintiff's own use.

A review of the master's findings, the only evidence in the case, shows that the plaintiff's mill is located at Adams, Massachusetts, and the defendant's mill at Bennington, New Hampshire. The capacity of the defendant's machines was considerably greater than that of the plaintiff's and the capacity of the machines was the bottleneck of the mills. The principal papers involved in this case are sulphite bond of Nos. 1, 2, and 4 grade, "ledger" of Nos. 1 and 2 grade, "Index," "Mimeo" of Nos. 1 and 3 grade, and "papeterie." The plaintiff had certain "mill" watermarks; "Etonian" applied to No. 1 bond, and "Publisher" and "Decade" applied to No. 2 bond. These watermarks appeared usually on No. 1 and at times on No. 2 bond. Among the plaintiff's customers in 1939 was the Courier-Citizen Company, a large printing plant at Lowell, Massachusetts, which bought various lines of paper for its customers, including large quantities of No. 4 bond. The latter company had been buying No. 4 bond and "Index" from the plaintiff since 1938. The plaintiff itself made and sold more papeterie than any other line although it manufactured and sold some "Etonian" No. 1 and "Publisher" and "Decade" No. 2 bond at its own mill. Plaintiff's mill was not adapted to the economical manufacture of No. 4 bond and for some time prior to 1939 the plaintiff had procured this paper from a mill named "Waterfalls." Because of a change of ownership at "Waterfalls," Mr. Henry J. Guild, president of the plaintiff, wanted a new source of supply for No. 4 bond and of certain other lines which had been manufactured at "Waterfalls" and in August or September, 1939, he approached Mr. Henry C. Barr, president of the defendant, with the view of having this paper manufactured by the defendant. At that time business was quiet and the defendant's mill was not running full time. Guild told Barr that Courier-Citizen No. 4 bond business amounted to from 750 to 1000 tons a year. Barr decided it could make this paper at a profit. Guild also told Barr that if the parties entered into a contract, the plaintiff would give this business to the defendant and would turn over other business on which the defendant's profit would be greater than its profit on the Courier-Citizen No. 4 bond. Guild also stated the plaintiff would enlarge its New York office and increase its sales force there.

On November 24, 1939, the defendant signed the main contract and a considerable number of the supplemental contracts. These had previously been signed by the plaintiff.

Before the contracts were signed by the defendant on November 24, 1939, plaintiff had sent orders for No. 3 papeterie, a type of paper more profitable to defendant than No. 4 bond, and Barr, on November 1, sent samples of different weights of No. 4 bond, white and colored, to Courier-Citizen. Also information was sought by the plaintiff and received with respect to defendant's capacity. The plaintiff sent the defendant sample sheets showing its watermarks which it expected to appear on various papers the plaintiff intended to order. During the negotiations before November 29, the plaintiff hired two extra salesmen at salaries of $6000 and $8000, respectively, and Barr expressed satisfaction with both. One of these salesmen spent most of his time and the other about one-half his time soliciting orders for Monadnock. Neither one of these salesmen spent any time on Courier-Citizen business. In February, of 1940, the plaintiff added another room...