Kann v. Wausau Abrasives Co.

• Decision Date: 07 April 1925
• Parties: KANN v. WAUSAU ABRASIVES CO.
• Court: New Hampshire Supreme Court

129 A. 374

KANN

v. WAUSAU ABRASIVES CO.

Supreme Court of New Hampshire. Merrimack.

April 7, 1925.

Transferred from Superior Court, Merrimack County; Branch, Judge.

Bill in equity by William L. Kann against the Wausau Abrasives Company for specific performance of certain provisions of a contract for the purchase and sale of crystalline garnet. Transferred upon defendant's demurrer without a ruling. Demurrer overruled.

Martin Paskus, of New York City, and Demond, Woodworth, Sulloway & Rogers, of Concord, for plaintiff.

George T. Hughes, of Dover, for defendant.

MARBLE, J. A demurrer in equitable proceedings does not differ essentially from a demurrer in an action at law. It "admits the truth of the facts stated in the bill, so far as they are relevant and are well pleaded" (Craft v. Thompson, 51 N. H. 536, 340), but insists that, upon the facts so stated, the plaintiff is not entitled to equitable relief.

The material allegations of the bill in the present case are as follows:

The defendant is a Wisconsin corporation engaged in the manufacture of abrasive papers, cloths, and grinding discs, and in connection with its business it owns and operates a garnet mine at Danbury, N. H. Garnet in crystalline form is not readily obtainable, and the deposits owned by the defendant at Danbury constitute the only available supply of this mineral thus far developed for commercial use in the United States.

The plaintiff, who had been engaged for some years in the sale of abrasives, contracted with the defendant for the purchase of 1000 tons of concentrated garnet to be taken from the Danbury mine. The garnet so purchased was to be used for grinding and smoothing glass, the utility of garnet for that purpose having been discovered by the plaintiff. Five hundred tons were to be delivered f. o. b. Pittsburgh, Pa., before January 1, 1923, and the remaining 500 tons, between that date and the following April, in approximate monthly installments to be more definitely fixed after delivery of the first 100 tons; payment to be made 60 days after shipment at the rate of $45 per ton. Each agreed not to compete with the other.

At the time the contract was executed, it was understood that the plaintiff was to have an option for five years from April 1, 1923, on the output of the mine in excess of the defendant's own requirements in the paper and cloth trade, and the defendant agreed to furnish the plaintiff six months prior to April 1 written information as to the amount of ore available on the property and its reasonable mill capacity for deliveries beyond the initial 1000 tons, core-drilling the property if necessary for that purpose. The option itself was inadvertently omitted from the original contract, but was later made a part thereof by correspondence.

The installation of new equipment by the defendant served to retard deliveries, and at the end of 1922 there were still unshipped 271 of the first 500 tons. This the defendant stored for the plaintiff, billing 150 tons to him as of December 30, and agreeing to carry over the balance for future billing. The plaintiff offered payment, but the defendant wrote him that it was "not necessary to have remittance but simply to get this on the books" to show in the year's business; that it was therefore billed to him in the regular way and could be shipped as he requisitioned it.

Meanwhile the plaintiff was attempting to obtain the stipulated information regarding the defendant's requirements and the amount of available ore, and his reason for not ordering regular shipments was because the defendant was withholding this Information. By letter of February 9 the defendant for the first time professed disappointment at the plaintiff's failure to pay for the billing of December 30, and announced its intention of seeking another market if the terms of the contract were not more strictly observed. The plaintiff replied February 19 expressing his understanding that the 60-day credit ran only from the date of actual shipment, but offering nevertheless to pay for the billing by March 1. In this letter he again requested information as to the defendant's requirements and the capacity of the mine. The defendant made no reply until March 6, when it notified the plaintiff that all his rights under the contract and option were forfeited by his failure to pay for the billing of December 30 and to give shipping instructions for the ensuing months. March 9 the plaintiff forwarded a certified check for the billing of December 30, and notified the defendant that he was prepared to pay for the entire balance upon receipt of the information asked for. At the same time, he elected to exercise the five-year option. The defendant returned the check March 12, and again repudiated the contract, whereupon the plaintiff by telegram directed shipment of all undelivered garnet due to April 1, offered to pay therefor in accordance with the terms of the contract, and refused to recognize the defendant's right of cancellation.

The bill expressly avers that when the defendant attempted to cancel the contract the plaintiff had not broken it in any particular so as to entitle the defendant to rescind; that the plaintiff's delay in ordering shipments was due solely to the defendant's failure to furnish the information called for by the contract; that the provision relating to monthly deliveries was waived; and that even if there was a technical breach on the plaintiff's part, it was not a material one. The bill also avers that the defendant's failure to furnish the required information and its attempted rescission were steps in a deliberate plan to repudiate the contract in order to obtain for itself the benefits of the plaintiff's glass trade by selling its product directly to his customers instead of to himself.

On the facts thus alleged, the plaintiff claims the right to elect whether to apply for specific performance for the future with pecuniary compensation for the past breach, or to waive specific performance, seek a supply of garnet elsewhere, and claim damages for the entire breach. But he avers that he cannot intelligently make such election without the promised information, and that because of the lack of any other developed source of supply and the uncertain expense of developing a new source, his damages cannot be properly determined by a jury. The prayer is for specific performance of the agreement to furnish information as to the capacity of the mine and the defendant's own requirements, for an injunction against a violation of the defendant's agreement not to sell its product to the plaintiff's trade, for an assessment of the plaintiff's damages, and for general relief.

The defendant claims that the demurrer should be sustained: (1) Because on the facts alleged the plaintiff himself has broken the contract; (2) because the so-called option lacks consideration, mutuality, and definiteness; and (3) because the plaintiff has an adequate remedy at law.

1. Although the contract was made in Pennsylvania and is doubtless governed by the laws of that state (Cunningham v. Ferguson, 81 N. H. 380, 127 A. 436; Kimball v. Express Co., 76 N. H. 81, 82, 79 A. 492; MacDonald v. Railway, 71 N. H. 448, 450, 52 A. 982, 59 L. R. A. 448, 93 Am. St. Rep. 550), this circumstance is not important, since the Uniform Sales Act of Pennsylvania, in its provisions relating to delivery in installments practically adopts the general rule governing bilateral contracts. This rule, so far as applicable to the present situation, may be thus stated: Unless the buyer commits a material breach, the seller is not excused from the obligation to perform further; and if the seller knowingly accepts defective performance, or accepts further performance after he is aware that a breach has been committed, such conduct "will operate as a waiver of his right to refuse to go on with the contract." 2 Williston, Sales, § 467.

According to the facts alleged, there is ample evidence to sustain a finding of waiver on the defendant's part. The defendant was itself responsible for the first delay in shipment. The option was an important part of the contract, and so treated by the plaintiff, yet the defendant continued to ignore the plaintiff's repeated requests for the data it had expressly agreed to furnish. It was at the defendant's suggestion that the unshipped garnet was stored. At the time of the billing of December 30, the defendant explicitly stated that it was "not necessary to have remittance," and that the garnet then in storage could be shipped as the plaintiff called for it. The plaintiff's letter expressing his understanding of the contract and offering to pay in case the defendant did not share his understanding was ignored by the defendant until the 60-day period had elapsed, when the defendant peremptorily declared the contract to be at an end, and rejected the payment which immediately followed.

The contract itself provided merely for approximate monthly shipments, and so far as...