Crane Ice Cream Co. v. Terminal Freezing & Heating Co.

• Decision Date: 26 February 1925
• Docket Number: 7.
• Citation: 128 A. 280,147 Md. 588
• Parties: CRANE ICE CREAM CO. v. TERMINAL FREEZING & HEATING CO.
• Court: Maryland Court of Appeals

128 A. 280

147 Md. 588

CRANE ICE CREAM CO. v. TERMINAL FREEZING & HEATING CO.

No. 7.

Court of Appeals of Maryland

February 26, 1925

Appeal from Superior Court of Baltimore City.

"To be officially reported."

Action by the Crane Ice Cream Company against the Terminal Freezing & Heating Company. Demurrer to the declaration was sustained and from the judgment entered thereon against plaintiff, it appeals. Judgment affirmed.

Argued before BOND, C.J., and URNER, ADKINS, DIGGES, PARKE, and WALSH, JJ.

Isaac Lobe Straus and J. Paul Schmidt, both of Baltimore (W. W Parker, of Baltimore, on the brief), for appellant.

Clarence K. Bowie, of Baltimore (Bowie & Clark, of Baltimore, on the brief), for appellee.

PARKE J.

The appellee and one W. C. Frederick entered into a contract for the delivery of ice by the appellee to Frederick, and, before the expiration of the contract, Frederick executed an assignment of the contract to the appellant; and on the refusal of the appellee to deliver ice to the assignee it brought an action on the contract against the appellee to recover damages for the alleged breach. The common counts of the declaration were abandoned, leaving an amended special count on the contract and assignment to which a demurrer was filed and sustained. It is from the judgment against the appellant on this demurrer that the appeal was taken.

The demurrer admitted the following material allegations: At the execution of the contract the Terminal Freezing & Heating Company, appellee, was a corporation engaged in the manufacture and sale of ice at wholesale within the state of Maryland, and William C. Frederick made and sold ice cream in Baltimore, where his plant was located. The original contract between these two parties was made on April 2, 1917, and ran until April 2, 1920. The contract was modified on June 3 1918, by the increase of the original contract price of ice from $2.75 a ton to $3.25, and before its expiration the contract was renewed by the parties for another three years so that the contract was continued until April 2, 1923, without change, save as to the higher agreed cost of the ice delivered.

The contract imposed upon the appellee the liability to sell and deliver to Frederick such quantities of ice as he might use in his business as an ice cream manufacturer to the extent of 250 tons per week, at and for the price of $3.25 a ton of 2,000 pounds on the loading platform of Frederick. The contractual rights of the appellee were (a) to be paid on every Tuesday during the continuation of the contract, for all ice purchased by Frederick during the week ending at midnight upon the next preceding Saturday; (b) to require Frederick not to buy or accept any ice from any other source than the appellee, except in excess of the weekly maximum of 250 tons; (c) to annul the contract upon any violation of the agreement by Frederick; and (d) to sustain no liability for any breach of contract growing out of causes beyond its control. The converse of these rights and liabilities of the appellee were the correlative liabilities and rights of Frederick under the contract.

There was a further provision that the contract in its entirety should continue in force from term to term, unless either party thereto gave to the other party at least 60 days' notice in writing before the expiration of the term of the intention to end the contract. The contract did not expressly permit or inhibit an assignment, but neither did it contain any word, such as assigns, to indicate that the parties contemplated an assignment by either.

Before the first year of the second term of the contract had expired Frederick, without the consent or knowledge of the appellee, executed and delivered to the appellant, for a valuable consideration, a written assignment dated February 15, 1921, of the modified agreement between him and the appellee. The attempted transfer of the contract was a part of the transaction between Frederick and the appellant whereby the appellant acquired by purchase the plant, equipment, rights, and credits, choses in action, "good will, trade, custom, patronage, rights, contracts," and other assets of Frederick's ice cream business, which had been established and conducted by him in Baltimore. The purchaser took full possession and continued the former business carried on by Frederick. It was then and is now a corporation "engaged in the ice cream business upon a large and extensive scale in the city of Philadelphia, as well as in the city of Baltimore, and state of Maryland," and had a large capitalization, ample resources, and credit to meet any of its obligations "and all and singular the terms and provisions" of the contract; and it was prepared to pay cash for all ice deliverable under the contract.

As soon as the appellee learned of this purported assignment and the absorption of the business of Frederick by the appellant, it notified Frederick that the contract was at an end, and declined to deliver any ice to the appellant. Until the day of the assignment the obligations of both original parties had been fully performed and discharged.

It may be stated as a general rule that a contract cannot be enforced by or against a person who is not a party to it, but there are circumstances under which either of the contracting parties may substitute another for himself in the rights and duties of the contract without obtaining the consent of the other party to the contract. The inquiry here is if the facts bring the case within the scope of the general rule, and the answer must be found from a consideration in detail of the relation of the parties concerned, the subject-matter of the contract, its terms, and the circumstances of its formation.

The basic facts upon which the question for solution depends must be sought in the effect of the attempted assignment of this executory bilateral contract on both the rights and the liabilities of the contracting parties, as every bilateral contract includes both rights and duties on each side while both sides remain executory. I Williston on Contracts, § 407. If the assignment of rights and the assignment of duties by Frederick are separated, they fall into these two divisions: (1) The rights of the assignor were (a) to take no ice, if the assignor used none in his business, but, if he did (b) to require the appellee to deliver, on the loading platform of the assignor, all the ice he might need in his business to the extent of 250 tons a week, and (c) to buy any ice he might need in excess of the weekly 250 tons from any other person; and (2) the liabilities of the assignor were (a) to pay to the appellee on every Tuesday during the continuance of the contract the stipulated price for all ice purchased and weighed by the assignor during the week ending at midnight upon the next preceding Saturday, and (b) not directly or indirectly, during the existence of this agreement, to buy or accept any ice from any other person, firm, or corporation than the said the Terminal Freezing & Heating Company, except such amounts as might be in excess of the weekly limit of 250 tons.

Whether the attempted assignment of these rights, or the attempted delegation of these duties must fail because the rights or duties are of too personal a character, is a question of construction to be resolved from the nature of the contract and the express or presumed intention of the parties. Williston on Contracts, § 431.

The contract was made by a corporation with an individual, William C. Frederick, an ice cream manufacturer, with whom the corporation had dealt for 3 years, before it executed a renewal contract for a second like period. The character, credit, and resources of Frederick had been tried and tested by the appellee before it renewed the contract. Not only had his ability to pay as agreed been established, but his fidelity to his obligation not to buy or accept any ice from any other source up to 250 tons a week had been ascertained. In addition, the appellee had not asked in the beginning, nor on entering into the second period of the contract, for Frederick to undertake to buy a specific quantity of ice or even to take any. Frederick simply engaged himself during a definite term to accept and pay for such quantities of ice as he might use in his business to the extent of 250 tons a week. If he used no ice in his business, he was under no obligation to pay for a pound. In any week, the quantity could vary from zero to 250 tons, and its weekly fluctuation, throughout the life of the contract, could irregularly range between these limits. The weekly payment might be nothing or as much as $812.50; and for every week a credit was extended to the eighth day from the beginning of every week's delivery. From the time of the beginning of every weekly delivery of the ice to the date of the payment therefor the title to the ice was in the purchaser, and the seller had no security for its payment except in the integrity and solvency of Frederick. The performances, therefore, were not concurrent, but the performance of the nonassigning party to the contract was to precede the payments by the assignor.

When it is also considered that the ice was to be supplied and paid for, according to its weight on the loading platform of Frederick, at an unvarying price without any reference either to the quantity used, or to the fluctuations in the cost of production or to market changes in the selling price throughout 3 years, the conclusion is inevitable that the inducement for the appellee to enter into the original contract and into the renewal lay outside the bare terms of the contract, but was implicit in them, and was the appellee's reliance upon its knowledge of an average quantity of ice consumed, and...