Kentucky River Mills v. Jackson

• Decision Date: 17 June 1953
• Docket Number: No. 11740.,11740.
• Citation: 206 F.2d 111
• Parties: KENTUCKY RIVER MILLS v. JACKSON.
• Court: U.S. Court of Appeals — Sixth Circuit

206 F.2d 111 (1953)

KENTUCKY RIVER MILLS v. JACKSON.

No. 11740.

United States Court of Appeals Sixth Circuit.

June 17, 1953.

Marion Rider, Frankfort, Ky. (Leslie W. Morris, Frankfort, Ky., on the brief), for appellant.

John L. Davis, Lexington, Ky. (James Park, Lexington, Ky., on the brief), for appellee.

Before SIMONS, Chief Judge, and McALLISTER and MILLER, Circuit Judges.

McALLISTER, Circuit Judge.

The issues in this case are: (1) whether an arbitration award was valid; (2) whether it could be enforced in the action commenced in the district court; and (3) whether an assignee for the purpose of suit could maintain an action on the assigned award.

The controversy arises out of the following circumstances: The Kentucky River Mills, appellant herein, is engaged in the operation of a spinning mill in Frankfort, Kentucky, spinning only such soft fibers as hemp and jute. In the latter part of 1943, after completing a large contract for the Navy, appellant sought to buy fiber for its own purposes. However, because of purchases by the government during the war period, such fibers as it had used in the past were not available on the open market. Appellant company, therefore, could not secure these fibers, at least until the domestic hemp crop would become available in the summer of 1944; and it was, accordingly, confronted with the alternatives of closing its mill or finding some other kind of fiber which it could spin.

For many years, appellant had purchased fiber for its own account through the firm of Smith & Bird, fiber brokers of New York City, and, in considering the needs of appellant company, Smith & Bird, in January 1944, suggested the use of a fiber called "caroa," grown and produced in Brazil. Appellant, accordingly, ordered a sample bale of caroa on January 19, 1944. After examining it, and taking into consideration the assurance of Smith & Bird that other mills in the East, engaged in the spinning of soft fibers, had used caroa in the past as a substitute for jute, appellant's general manager, in a telephone conversation on February 15, 1944, purchased 100 tons of caroa from Smith & Bird, at a price of $40,320. The purchase was confirmed by letter from Smith & Bird, and the fiber was promptly shipped, received, accepted, and paid for by appellant company. In the above mentioned letter confirming the sale, Smith & Bird informed appellant company that they had secured an option on an additional 200 tons of caroa, good for one week, and that they understood that the company would advise them shortly if they wanted this additional tonnage.

After the above mentioned shipment of fiber was received by appellant company, it was found that it would be necessary to make certain extensive changes in its mill in order to spin the fiber. Before making such changes, appellant's general manager went to New York during the week of February 21, 1944, to discuss with Smith & Bird the matter of the availability of sufficient fiber to meet its requirements in the future, and in the discussion, emphasized the company's concern to have sufficient fibers so that there would be no stoppages in its manufacturing program. Although the company did not order more caroa fiber until six weeks later, it was testified to by the company's general manager that at no time was there any indication that the fiber would be delayed in delivery or that the company would be prevented from operating its mill continuously. The discussion was generally about the possibility of getting fiber outside the United States, and appellant understood that, as to a possible shipment of 95 tons of the fiber which was mentioned as then being in Brazil, it would be necessary to secure an import permit from the federal government.

Following the New York conference, appellant's general manager, in a telephone conversation with Smith & Bird, on April 5, 1944, told them that appellant company would purchase 225 tons of the fiber that they had indicated would be available. He stated that he told them it was necessary that the company suffer no stoppages in its manufacturing program, and he testified, with regard to such conversation, that there were no indications of any difficulty in the matter other than that there would have to be secured a permit for importation of fibers from Brazil. Following this telephone conversation and on the same day, Smith & Bird wrote appellant company, confirming the telephone conversation, "at which time it was agreed upon the following:

"We have sold you 100 tons of fiber * * *."

which, it was stated, would be shipped that week and the next.

"In addition to the foregoing we have sold you subject to confirmation 125 tons * * * of which there are 30 tons * * * on spot New York and the balance of 95 tons * * * will be prompt shipment from Brazil subject to obtaining import permit. Regarding these 125 tons, shortly after our telephone conversation with you we cabled Brazil this acceptance, and as soon as we have their reply we will advise you."

In the above mentioned letter, it will be seen that the confirmation of the order by Smith & Bird divided the fiber sold into two categories: (1) the 100 tons sold, and (2) the 125 tons sold "subject to confirmation," of which 30 tons were on spot in New York, and 95 tons in Brazil, subject to obtaining import permit.

Two days after the date of the above letter, Smith & Bird wrote appellant company, on April 7, 1944, as follows:

"Referring to our letter of April 5th, 1944, we have received confirmation of 125 tons of Caroa, and for the import portion have filed our application for licenses. Just as soon as we receive the permits, we will send you contract."

On April 20, Smith & Bird wrote appellant company:

"We are pleased to advise that today we received from Washington the War Production Board import permit covering 95 tons of Caroa Fibre.

"For the total of 125 tons sold you on April 7th you will find enclosed our two contracts in duplicate, as follows:

"No. 5529-A 30 tons No. 5 shipped from spot New York.

"No. 5529-B 95 tons comprised of 50 tons No. 3 and 45 tons No. 5 for shipment from Brazil as soon as possible.

"Kindly retain the accepted originals for your file and accept and return the duplicates to us at your convenience."

The two duplicate contracts enclosed in the above letter of April 20, 1944, provided for the sale of the 95 tons of caroa fiber from Brazil, and the provision therein as to shipment is as follows:

"SHIPMENT, as soon as possible, direct or indirect, with or without transhipment, for U. S. Atlantic port, thence by rail to Frankfort, Ky. (herein called destination). Shipment is contingent upon freight space being available to seller within the time specified; if such freight space is not available, shipment is to be as soon as possible thereafter."

It may be noted that while the contract was a printed form, the provision for shipment "as soon as possible" was in typewriting.

On April 22, 1944, appellant company received shipment of the 100 tons, mentioned as being sold in Smith & Bird's letter of April 5, 1944, as well as the 30 tons on spot in New York which were sold "subject to confirmation." At that time, the balance of the order of 95 tons, also sold subject to confirmation, was still in Brazil, although the order had been confirmed by Smith & Bird's vendor in that country.

When the above mentioned shipment of 130 tons of caroa arrived in Frankfort, appellant's general manager was out of the city. The fiber, however, was received, accepted, and paid for by appellant company, and no question is raised in any way about this shipment.

It is the shipment of the 95 tons of caroa fiber from Brazil that gives rise to this case; and one of the important issues is whether the parties agreed that shipment of the caroa fiber then in Brazil was to be made "promptly" or "as soon as possible."

When, in May 1944, appellant company's general manager returned to his office after a few weeks' absence, he found the letter of April 20, 1944, from Smith & Bird, and the two duplicate contracts therein enclosed, one for the 30 tons of fiber shipped from spot New York, which had already been received, and the other, for the 95 tons of fiber still at the port in Brazil awaiting shipping space. He read the letter and contracts, signed the contracts of purchase on behalf of appellant company, and returned them to Smith & Bird, at the same time enclosing check in payment for the 30-ton shipment, with a letter stating: "You will find enclosed the duplicates of the contracts covering our purchase of Caroa Fibre with the proper endorsement indicated. Please accept our apology for the delay that has occurred in this instance." Below the signature was the notation: "Encls: Duplicates of two contracts covering the purchase of Caroa Fibre."

Because of the shortage of freight space in ships bound for this country from South America, due to war conditions, the Brazilian shipment continued to be delayed. On July 10, 1944, a member of the firm of Smith & Bird wrote appellant that shipping space from Brazil had been promised for the latter part of that month. Upon receipt of this letter, appellant's general manager called Smith & Bird by telephone, stating that they were putting the company in a very bad position, and that it was faced with the situation of stopping the mills, and revamping the machinery to go back into the spinning of hemp; and that, since the 95 tons had not yet cleared the port in Brazil, he informed Smith & Bird: "I think we would like to cancel our contract." He was, however, informed by Smith & Bird that because of the completion of their contract with their South American supplier, they were not in a position to cancel. The 95 tons in question arrived in New York from Brazil on September 12, 1944, and Smith & Bird wrote the company that it was being shipped immediately. In reply to this letter, the company's general manager telephoned them and...