Canadian Indus. Alcohol Co. v. Dunbar Molasses Co.

• Decision Date: 05 January 1932
• Citation: 258 N.Y. 194,179 N.E. 383
• Parties: CANADIAN INDUSTRIAL ALCOHOL CO., Limited, v. DUNBAR MOLASSES CO.
• Court: New York Court of Appeals Court of Appeals

258 N.Y. 194

179 N.E. 383

CANADIAN INDUSTRIAL ALCOHOL CO., Limited,

v.DUNBAR MOLASSES CO.

Court of Appeals of New York.

Jan. 5, 1932.

Action by the Canadian Industrial Alcohol Company, Limited, against the Dunbar Molasses Company. From a judgment of the Appellate Division (233 App. Div. 821, 250 N. Y. S. 951), affirming a judgment entered on a verdict of a jury in favor of plaintiff, defendant appeals by permission.

Affirmed.

Appeal from Supreme Court, Appellate Division, First department.

Jay Leo Rothschild, Louis Rivkin, both of New York City, and Walter S. Beck, for appellant.

George de Forest Lord, Thaddeus G. Cowell, and Jesse Hoyt, all of New York City, for respondent.

CARDOZO, C. J.

A buyer sues a seller for breach of an executory contract of purchase and sale.

The subject-matter of the contract was ‘approximately 1,500,000 wine gallons Refined Blackstrap [molasses] of the usual run from the National Sugar Refinery, Yonkers, N. Y., to test around 60% sugars.’

The order was given and accepted December 27, 1927, but shipments of the molasses were to begin after April 1, 1928, and were to be spread out during the warm weather.

After April 1, 1928, the defendant made delivery from time to time of 344,083 gallons. Upon its failure to deliver more, the plaintiff brought this action for the recovery of damages. The defendant takes the ground that, by an implied term of the contract, the duty to deliver was conditioned upon the production by the National Sugar Refinery at Yonkers of molasses sufficient in quantity to fill the plaintiff's order. The fact is that the output of the refinery, while the contract was in force, was 485,848 gallons, much less than its capacity, of which amount 344,083 gallons were allotted to the defendant and shipped to the defendant's customer. The argument for the defendant is that its own duty to deliver was proportionate to the refinery's willingness to supply, and that the duty was discharged when the output was reduced.

The contract, read in the light of the circumstances existing at its making, or more accurately in the light of any such circumstances apparent from this record, does not keep the defendant's duty within boundaries so narrow. We may assume, in the defendant's favor, that there would have been a discharge of its duty to deliver if the refinery had been destroyed (Stewart v. Stone, 127 N. Y. 500, 28 N. E. 595,14 L. R. A. 215;Dexter v. Norton, 47 N. Y. 62, 7 Am. Rep. 415;Nitro Powder Co. v. Agency of Canadian Car & Foundry, Co., 233 N. Y. 294, 297, 135 N. E. 507), or if the output had been curtailed by the failure of the sugar crop (Pearson v. McKinney, 160 Cal. 649, 117 P. 919; Howell v. Coupland, 1 Q. B. Div. 258; 3 Williston on Contracts, § 1949), or by the ravages of war (In re Badische Co., Ltd., [1921] 2 Ch. 331; Horlock v. Beal, [1916] 1 A. C. 486), or conceivable in some circumstances by unavoidable strikes (American Union Line v. Oriental Navigation Corp., 239 N. Y. 207, 219, 146 N. E. 338;Normandie Shirt Co. v. J. H. & C. K. Eagle, 238 N. Y. 218, 229, 144 N. E. 507, 35 A. L. R. 714;Delaware, L. & W. R. Co. v. Bowns, 58 N. Y. 573; and cf. Blackstock v. New York & Erie R. Co., 20 N. Y. 48, 75 Am. Dec. 372; also 2 Williston on Contracts, § 1099, pp. 2045, 2046). We may even assume that a like result would have followed if the plaintiff had bargained not merely for a quantity of molasses to be supplied from a particular refinery, but for molasses to be supplied in accordance with a particular contract between the defendant and the refiner, and if thereafter such contract had been broken without fault on the defendant's part. Scialli v. Correale, 97 N. J. Law, 165, 117 A. 255; cf., however, Marsh v. Johnston, 125 App. Div. 597, 109 N. Y. S. 1106; Id., 196 N. Y. 511, 89 N. E. 1104. The inquiry is merely this, whether the continuance of a special group of circumstances appears from the terms of the contract, interpreted in the setting of the occasion, to have been a tacit or implied presupposition in the minds of the contracting parties, conditioning their belief in a continued obligation. Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co., [1916] 2 A. C. 397, 406, 407; Blackburn Bobbin Co. v. T. W. Allen & Sons, [L. R. 1918] 1 K. B. 540; Lorillard v. Clyde, 142 N. Y. 456, 37 N. E. 489,24 L. R. A. 113; 3 Williston on Contracts, § 1952.

Accepting that test, we ask ourselves the question: What special group of circumstances does the defendant lay before us as one of the presuppositions immanent in its bargain with the plaintiff? The defendant asks us to assume that a manufacturer, having made a contract with a middleman for a stock of molasses to be procured from a particular refinery, would expect the contract to lapse whenever the refiner chose to diminish his production, and this in the face of the middleman's omission to do anything to charge the refiner with a duty to continue. Business could not be transacted with security or smoothness if a presumption so unreasonable were at the root of its engagements. There is nothing to show that the defendant would have been unable by a timely contract with the refinery to have assured itself of a supply sufficient for its needs. There is nothing to show that the plaintiff, in giving the order for the molasses, was informed by the defendant that such a contract had not been made, or that performance would be contingent upon obtaining one thereafter. If the plaintiff had been so informed, it would very likely have preferred to deal with the refinery directly, instead of dealing with a middleman. The defendant does not even show that it tried to get a contract from the refinery during the months that intervened between the acceptance of the plaintiff's order and the time when shipments were begun. It has wholly failed to relieve itself of the imputation of contributory fault. 3 Williston on...