Etna Forge & Bolt Co. v. Youngstown Sheet & Tube Co.
| Decision Date | 11 August 1922 |
| Docket Number | 2810. |
| Citation | 282 F. 786 |
| Parties | ETNA FORGE & BOLT CO. v. YOUNGSTOWN SHEET & TUBE CO. |
| Court | U.S. Court of Appeals — Third Circuit |
William A. Wilson and Calvert, Thompson & Wilson, all of Pittsburgh Pa., for plaintiff in error.
Hallock C. Sherrard and Packer & Sherrard, all of Pittsburgh, Pa for defendant in error.
Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.
This was a suit by defendant in error, hereinafter called plaintiff, to recover the balance of the purchase price of 400 tons of steel bars at '$3.50 per cwt delivered.' Judgment was entered against the defendant for the full amount claimed to be due for want of a sufficient affidavit of defense. The defendant sued out a writ of error to this court on the ground that the judge of the District Court erred in entering the judgment.
The contract, dated August 30, 1920, provided that plaintiff was to ship 400 tons of steel bars at $3.50 per hundredweight 'at mill's convenience,' which refers to the convenience of the plaintiff. Defendant alleged in its affidavit of defense that in the negotiations for the sale it 'made known to the plaintiff that it did not require more than 100 tons of steel for immediate delivery, but that it would require the full amount of * * * 400 tons during the remainder of the year 1920'; that plaintiff 'represented to the defendant that there was very little likelihood that any steel on the said order could be shipped before the last quarter of the year'; that delivery could not possibly be made, except from time to time, during the fourth quarter of 1920; that the price of steel fell shortly after the contract was made, and that by a custom of the steel trade it was entitled to receive the steel not already shipped at the reduced price, and that defendant was induced to enter into the contract by these fraudulent and misleading representations of the plaintiff, which shipped the entire 400 tons within six days after the contract was made.
Judgment was entered for the plaintiff on three grounds: (1) The averments of the matters relied on by defendant are lacking in definiteness and particularity; the person making the representations is not named, and whether they were oral or written is not stated. (2) The defendant received and unloaded all the steel, notwithstanding the alleged representations, when it was not compelled to do so under its theory of the case. (3) Damages to be recovered must always be the natural and proximate consequence of the act complained of, and those results must be considered proximate which the wrongdoer from his position must have contemplated as a probable consequence of his fraud or breach of contract. Smith v. Bolles, 132 U.S. 125, 10 Sup.Ct. 39, 33 L.Ed. 279. It is not averred or even suggested in the affidavit of defense that the plaintiff contemplated a drop in the price of steel, and so the damages demanded cannot be said to be such natural and probable consequences of the breach as to have been in the contemplation of the parties at the time of entering into the contract.
Defendant says that the apparent inconsistency of receiving and unloading the steel when he was not compelled to do so was within his legal rights, for, after discovering the fraud, he had the right to affirm the contract and recover damages on account of the fraud, or the right to disaffirm it, and he chose the former. Heastings v. McGee, 66 Pa. 384; Guffey v. Clever, 146 Pa. 548, 23 A. 161. In view of the defendant's averments that it 'made known to the plaintiff that it did not require more than 100 tons of steel for immediate delivery'; that plaintiff told 'defendant that there was very little likelihood that any steel on said order could be shipped before the last quarter of the year'; that, because of previous orders on its books, plaintiff represented that it was doubtful whether or not it would accept an order, unless it was specified that shipment should be made at 'mill's convenience'; and that, even if defendant should 'so specify, delivery could not possibly be made by plaintiff, except from time to time during the fourth quarter of the year, 1920, and, moreover, that plaintiff could give defendant no positive assurance that delivery could even be made then'-- the allegation, in the face of these averments, that defendant made it a part of its instruction to plaintiff 'not to ship more than 100 tons during the first month of the last quarter,' seems unnatural and inconsistent, unless the defendant was very suspicious of the good faith of the plaintiff and questioned the accuracy of its statements. If such were the case, it is almost inexplicable that defendant, as a natural and wise business precaution, did not see to it that the precise understanding between it and the plaintiff was incorporated into he contract.
Defendant received all the steel and unloaded it, and alleged in the affidavit of defense that it 'promptly complained of the breach of its agreement as to delivery. ' Although the learned District Judge criticized the lack of definiteness and particularity in the averments of 'the matters relied upon by way of set-off, recoupment, or mitigation of damages,' in that persons were not named, whether communications were oral or written, yet all that defendant says in his brief, filed in this court, about its immediate acceptance and unloading of all the steel when shipped, is:
And again:
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