Hunt v. Stimson
| Decision Date | 03 January 1928 |
| Docket Number | No. 4743.,4743. |
| Parties | HUNT et al. v. STIMSON et al. |
| Court | U.S. Court of Appeals — Sixth Circuit |
COPYRIGHT MATERIAL OMITTED
M. S. Ross, of Nashville, Tenn. (J. S. Laurent, of Louisville, Ky., and La Vega Clements, of Owensboro, Ky., on the brief), for plaintiffs in error.
Thos. E. Sandidge, of Owensboro, Ky. (E. B. Anderson and Sandidge & Sandidge, all of Owensboro, Ky., on the brief), for defendants in error.
Before DENISON, DONAHUE, and KNAPPEN, Circuit Judges.
Plaintiffs in error, a partnership, with headquarters at Nashville, Tenn., were manufacturers of lumber, controlling several small mills in Tennessee, and owning a mill in Georgia. They received from defendants in error an order for certain ash lumber, and acknowledged the order by letter dated March 15, 1920, the essential parts of which are as follows:
This was accepted by the purchasers and became the contract. During the period named six cars were shipped. No dispute arose. The vendees then neglected or refused to give further shipping directions, and eventually denied liability to receive any more. The vendors brought this action, claiming damages for the failure to receive the remaining 14 cars out of a total of 20. At the close of plaintiffs' evidence upon a jury trial, the court below directed a verdict for defendants, for the reasons that the contract imposed no legal obligations, and that the plaintiffs had not proved that they were ready and able to perform.
The mutually binding force of contracts to sell and buy the output of a going manufacturing operation is now well settled, even though there is no definite obligation on either side to the extent of a named quantity. Pittsburgh Co. v. Neuer Co. (C. C. A. 6) 253 F. 161.
We have no hesitation in classifying this contract as one for output, modified by the minimum and maximum limits. At the different mills the vendors were engaged in cutting timber of all kinds as it came along from a complete cutting operation. This brought to the saws at Blakely and at the Tennessee mills continuing quantities of ash, more or less, as might happen. This was cut into lumber of such thickness as good sawmill practice permitted. The result was that there was a continuing more or less regular production of ash lumber of the sizes and grades specified. True, the vendors might measurably decrease or increase the quantity by some selection of timber to be cut or logs to be sawed; but the contract kept this selective right within limits which were agreed upon as reasonable. The contract was therefore sufficiently definite to indicate a meeting of minds.
The feature next noticeable is presented by the maximum and minimum limits. Which party had the right of choice? It is not clear that this question, as an independent one, exists, because it is modified by the output feature; but if the contract were to be treated as an ordinary one with such limitations, and whether it were to be judged by the rule of the "first actor" or by the rule that the choice lies with the one for whose benefit the option is given (see full discussion in Crystal Co. v. Robertson Co. C. C. A. 6 289 F. 15, 18), the vendors, not the vendees, had the right to elect. The elasticity was allowed for their benefit, and the first step was for them to produce and have ready for delivery the first shipment that might be specified.
We think, therefore, that the contract contemplated and covered all of the firm texture white ash boards of the specified sizes and of the vendors' production which should be ready for shipment during the time specified, and extended to 20 cars, if so much were ready. A literal reading would confine the subject-matter to lumber which was produced by the vendors after March 15, but this is not the reasonable meaning. The vital thing was that the lumber should be ready for shipment. There might be, as there was in fact, a small amount which was ready for shipment on March 15, and which the conduct of the parties showed they intended to include. We think it more reasonable to say that the phrase "which we produce" was intended merely to identify the lumber as the vendors' product, and, plainly, if it was ready for shipment on March 15, it was ready "during the time above mentioned."
A question is made as to the period of the contract. It says "during the next three months." In precision the time would expire June 15. Then the contract continues: "Delivery to be complete by July 1, 1920." These clauses should be read together and reconciled. In our judgment, the proper construction is that delivery on or before June 15 was contemplated, but that the additional tolerance or grace period of two weeks was provided for. The vendees might fairly expect completion by June 15. They could not demand it until July 1.
The serious question which is made as to the validity of the contract depends upon the cancellation clause above quoted. It is said that, if either party to an executory contract retains the right to cancel it at his pleasure for any remaining period, it imposes no positive obligation on him, and the contract fails for lack of mutuality. The general principles applied in courts of equity may develop a lack of mutuality into a bar to relief; but in courts of law that defense rests on the legal rule that a contract must be supported by consideration, and at law it is only upon a contract where there is no consideration for the defendant's promise sued upon, except the plaintiff's correlative promise, that the question of mutuality becomes important. See the full and satisfactory discussion by Circuit Judge Woolley, in Meurer Co. v. Martin (C. C. A. 3) 1 F.(2d) 687.1 This is well illustrated by the familiar option contract of purchase or sale. A contract which imposes on the vendors an obligation to sell, but puts no duty upon the vendee to buy, except at his pleasure, will be completely valid, if the vendee parts with sufficient consideration to support the vendors' promise; and the situation must be the same, where the vendee definitely agrees to buy, though the vendors have an option to sell or not; and relatively small considerations are held sufficient.
A promise contained in the contract and made by the optionee to give substantial time and effort to investigating any question, like the value of the property, which he must consider before he decides whether or not to exercise the option, is a sufficient consideration for the promise to sell or buy if the optionee thereafter decides to buy or sell. See 23 R. C. L. p. 1291, § 106. Necessarily, this same thing is true if the contract contains any substantial and valuable promise by the one to whom the option is extended — assuming that the different parts of the contract are not properly separable. This is illustrated by the cases involving oil leases, which hold them valid contracts, even though the lessee has an optional...
To continue reading
Request your trial
-
State ex rel. State Highway Commission v. Warner
...incompetent but only went to its weight. Wetmore v. Brig Lumber Mills Co., 99 Cal.App.2d 492, 221 P.2d 963, 964(1); Hunt v. Stimson, 6 Cir., 23 F.2d 447, 452(12). See Cash v. Wysocki, Mo.App., 229 S.W. 428, 430(6). The only other point in the Commission's brief is that 'the court erred in r......
-
Nat. Pub. Co. v. Hartford Fire Ins. Co., 23651.
...reports, the judge should admit or exclude according to the overall reliability of the evidence." Id., § 10, p. 43, citing Hunt v. Stimson, 23 F.2d 447 (6th Cir. 1928) (sales manager of lumberyard permitted to testify as to amount of lumber on hand on basis of his estimates from inspection ......
-
F. Jacobus Transp. Co. v. Gallagher Bros. Sand & G. Corp.
...1 F.2d 687; Electric Management & Engineering Corporation v. United Power & Light Corporation, 8 Cir., 1927, 19 F.2d 311; Hunt v. Stimson, 6 Cir., 1928, 23 F.2d 447; Robey v. Sun Record Company, Inc., 5 Cir., 1957, 242 F.2d 684; 1 Williston, Contracts section 105A (3d ed. 1957). Mutuality b......
-
Sylvan Crest Sand & Gravel Co. v. United States
...consideration", the agreement is not nudum pactum. Corbin, The Effect of Options on Consideration, 34 Yale L.J. 571, 585; see Hunt v. Stimson, 6 Cir., 23 F.2d 447; Gurfein v. Werbelovsky, 97 Conn. 703, 118 A. 32. A promise is not made illusory by the fact that the promissor has an option be......