Grainger Bros. Co. v. G. Amsinck & Co.

• Decision Date: 13 October 1926
• Docket Number: No. 7200-7203.,7200-7203.
• Parties: GRAINGER BROS. CO. v. G. AMSINCK & CO., Inc., and three other cases.
• Court: U.S. Court of Appeals — Eighth Circuit

15 F.2d 329 (1926)

GRAINGER BROS. CO. v. G. AMSINCK & CO., Inc., and three other cases.

Nos. 7200-7203.

Circuit Court of Appeals, Eighth Circuit.

October 13, 1926.

William Ritchie, Jr., of Omaha, Neb., for Grainger Bros. Co. and Bliss Syrup Refining Co.

William Ritchie, Jr., and Halleck F. Rose, both of Omaha, Neb., for H. J. Hughes Co.

Joseph B. Fradenburg, of Omaha, Neb. (Francis P. Matthews, of Omaha, Neb., on the brief), for G. Amsinck & Co., Inc.

Before LEWIS, Circuit Judge, and FARIS and PHILLIPS, District Judges.

PHILLIPS, District Judge.

The above causes grow out of alleged breaches of contracts to sell sugar. They were argued and submitted together and may be disposed of conveniently in one opinion.

I. Cause No. 7200.

On April 26, 1920, Amsinck & Co. entered into a written contract with Grainger Brothers Company, for the sale to the latter of 250 tons of "white granulated sugar at 21 cents per pound, * * * f. o. b. San Francisco." The sugar was to be shipped from Java. At the time the contract was entered into the subject-matter of the sale had not been ascertained. The contract provided that Grainger Bros. Company should establish an irrevocable letter of credit. Grainger Bros. Company, through the First National Bank of Lincoln, Neb., and the Continental & Commercial National Bank of Chicago, provided such letter of credit, for the payment at the Wells-Fargo Nevada National Bank of San Francisco of the purchase price of the sugar, upon the delivery to the San Francisco bank of drafts accompanied by proper bills of lading for the shipments of the sugar.

Prior to the arrival of the sugar at San Francisco, Grainger Bros. Company discovered that Amsinck & Co. proposed to deliver in fulfillment of the contract, not white granulated sugar, but Java white sugar, and both by written and oral notice to Amsinck & Co. and by notice to the above-mentioned banks, the contents of which were communicated to Amsinck & Co., notified Amsinck & Co. that Grainger Bros. Company would not accept Java white sugar, but would insist on white granulated sugar as provided in the contract. The sugar arrived at San Francisco on November 3, 1920. On November 12, 1920, Amsinck & Co. shipped the sugar to Grainger Bros. Company under bills of lading which improperly described the sugar as white granulated sugar, and presented such bills of lading with drafts attached to the San Francisco bank and collected the full purchase price of the sugar.

While the sugar was in transit, Grainger Bros. Company undertook to prevent the First National Bank of Lincoln and the Continental & Commercial National Bank of Chicago from honoring the drafts. Failing in this, and after the Lincoln bank had paid the drafts and charged the same to the account of Grainger Bros. Company, it received the bills of lading and took possession of the sugar on December 3, 1920. Thereupon Grainger Bros. Company, without notice to Amsinck & Co. that it rejected the sugar, and without notice that it would sell the same for the account of Amsinck & Co. offered the sugar for sale and proceeded to sell the same.

On December 14, 1920, Grainger Bros. Company brought this action to recover the purchase price of the sugar, less what it might be able to realize from a resale of the sugar delivered. In its original petition, Grainger Bros. Company, after alleging the facts above set forth, stated:

"(18) That this plaintiff was, as above set forth, coercively and in violation of its rights compelled to receive and take the said railroad bill of lading in order to protect itself from any further damage and loss on account of the unlawful conversion of its funds by the defendant and at the defendant's instance as above set forth.

"(19) That the sugar which was represented by said railroad bill of lading was at the time of receipt by this plaintiff and the conversion of this plaintiff's funds as above set forth of a value equal to an amount which was at that time seventy thousand dollars ($70,000.00) less than the value of an identical amount of sugar similar in quality to the sugar which the defendant actually contracted to deliver to this plaintiff as hereinbefore set forth.

"That the plaintiff is holding said two thousand two hundred forty-one (2,241) bags of sugar and attempting to sell the same, and when the same is sold will apply the net proceeds thereof to the plaintiff's claim against the defendant on account of said wrongful conversion of this plaintiff's funds as above set forth; that said sugar will not bring this plaintiff more than thirty-five thousand six hundred fifty-seven dollars and sixty-seven cents ($35,657.67).

"(20) That this plaintiff has been damaged by reason of the aforesaid acts of the defendant as hereinbefore set forth in the sum of $70,000, with interest thereon from the 1st day of December, 1920, until paid."

Grainger Bros. Company proceeded to sell the sugar and realized therefrom a net return of $34,208.73. After the sale of the sugar Grainger Bros. Company filed an amended petition, in which, among other things, it alleged the following:

"(7) That `white granulated sugar' as that description was understood by the plaintiff and merchants and brokers generally engaged in buying and selling sugars in the United States, and especially in the middle western parts of the United States, where the plaintiff transacts its business and where the aforesaid sale was procured, at that time and for 25 years prior to the time of entering into said contract and the procuring of said letter of credit, as above set forth, was a description which was commonly applied by said merchants and brokers to sugar which had been refined and was pure white, neutral in color, and free from molasses, all of which facts were well known, or should have been well known to the defendant at the time the aforesaid sales contract and letter of credit were procured."

"(12) That the sugar * * * was not actually white granulated sugar as that description has been commonly understood by merchants and brokers generally engaged in buying and selling sugars in the middle western part of the United States for the past 25 years, and as that description at the time said sales contract was entered into and said letter of credit was issued, was commonly known and understood by the plaintiff and said merchants and brokers; that the sugar * * * was not a refined sugar, was not pure white, was not neutral in color, nor was said sugar free from molasses, but * * * was a washed sugar, and had a yellowish cast, and contained more or less molasses, and was dirty and was permeated with black specks and hemp fibers and was properly described as `white Java sugar,' or `Java white sugar,' and was not properly described as `white granulated sugar.'"

"(16) That immediately upon the receipt of the railroad bills of lading, and said sugar, the plaintiff made every effort to sell and dispose of the same for defendant's account, and at the best possible terms and price, and in such manner as to reduce its loss as much as possible, but because of the inferior grade of sugar the plaintiff was only able to secure on account of the sale thereof the total sum of thirty-four thousand two hundred eight and 73/100 dollars ($34,208.73), which was at the time of the making of the sales thereof, and at the place where said sales were made, to wit, at Lincoln, Neb., the reasonable market value thereof, and the best market price obtainable therefor."

In its answer, Amsinck & Co. denied the allegations of the first amended petition with reference to the meaning of the words "white granulated sugar," and denied the allegations with reference to the kind and quality of sugar tendered under the contract, and alleged "that the said plaintiff received said sugar about the 1st of December, 1920, and immediately upon its receipt sold portions of the said sugar in its ordinary course of business, and never notified the plaintiff that it rejected said sugar, and that the said plaintiff by its conduct did accept said sugar as being in accordance with the terms of the contract by and between the parties hereto."

A written stipulation was entered into, waiving a trial by jury. The cause was transferred to the equity docket and came on duly for trial before the court. The trial court found that Grainger Bros. Company, with knowledge of the kind and character of sugar tendered, received the sugar and, without notice to Amsinck & Co. that it refused to accept the sugar, exercised dominion over, offered for sale, and sold the sugar, and that it thereby elected to accept the sugar under the contract, and could not thereafter rescind the contract and recover back the purchase price.

The weight of the evidence warrants the conclusion that the term "granulated sugar," at the time the contract with Grainger Bros. Company was entered into, and for a long time prior thereto, had a definite and well-established meaning to the sugar trade in the continental United States, namely, "refined pure white sugar, free from molasses and foreign substances, dry and free running," and that the sugar shipped to Grainger Bros. Company was not white granulated sugar, but Java white sugar; that it was yellow in color, contained molasses, specks of dirt, and fiber, and was not free running, and could not be used for the comprehensive purposes for which white granulated sugar is used.

Amsinck & Co. obtained payment for the sugar by a false description thereof in the bills of lading after it had been advised by Grainger Bros. Company that it would not accept white Java sugar, and delivery of the sugar which did not comply with the contract was virtually forced upon Grainger Bros. Company.

Under the facts above stated, Grainger Bros. Company undoubtedly had the right, when the sugar arrived at Lincoln, to refuse to accept the sugar as a compliance with the contract and to elect to rescind the contract on account of the quality of the...