Lillard v. Kentucky Distilleries & Warehouse Co.

• Decision Date: 17 December 1904
• Docket Number: 1,332.
• Citation: 134 F. 168
• Parties: LILLARD v. KENTUCKY DISTILLERIES & WAREHOUSE CO.
• Court: U.S. Court of Appeals — Sixth Circuit

134 F. 168

LILLARD v. KENTUCKY DISTILLERIES & WAREHOUSE CO.

No. 1,332.

United States Court of Appeals, Sixth Circuit.

December 17, 1904

[Copyrighted Material Omitted] [Copyrighted Material Omitted]

This is an action of assumpsit for the recovery of the price of distillery slops contracted to the defendant to be delivered at a certain feeding lot, being all of the slop made from a daily consumption of 1,200 bushels of grain during the operation of the Cedar Brook Distillery between December 25 1902, and May 25, 1903.

The plaintiff sets out a copy of a contract in writing between the parties, and avers that this slop was sold, delivered, and received according to the terms of this contract, but that the defendants have failed and refused to pay for same. The defendants filed an answer and counterclaim. In substance they deny that the writing produced by the plaintiff and sued upon constitutes the whole of the contract, and say that contemporaneously with the contract sued upon there was another written agreement in respect of the same subject-matter, and that, though the latter is dated November 18, 1902, and the former November 19, 1902, each was made with reference to the other, and that they should be read together as constituting one agreement. This contract of November 18th is set out and made part of defendant's answer. This agreement so set up as a part of the contract between the parties is primarily a contract for the lease of 30 acres of ground adjoining Cedar Brook Distillery, to be used as a feeding lot for cattle fed upon slop from the distillery; and the right to put thereon, and remove at the end of the lease, all proper troughs pipes, sheds, etc., proper for such use. The parties to this lease were the Julius Kessler & Co., a corporation engaged in the operation of Cedar Brook Distillery, and one W. F. Lillard, one of the defendants herein. The term of the lease was 10 years, with right of renewal, at an annual rental of $250. It was also provided that the lessor, W. F. Lillard, or his brother, R. H. Lillard, the other defendant herein, or the firm of Lillard Bros., here sued as partners, who are the parties of the second part to the contract for the sale of slops mentioned above, should have the refusal of the distillery slops during any year, at the market price, and that during any year that this option was exercised no rent should be paid for said lot. It is averred that said corporation styled Julius Kessler & Co. was either a trustee or agent acting for the plaintiff, the Kentucky Distilleries & Warehouse Company, a corporation of the state of New Jersey, and as such was operating said contract of leasing with said W. F. Lillard for the use and benefit of said plaintiff and with reference to the contract for sale of slops to defendants both of which agreements were negotiated together. It is then averred that both of said contracts were made in recognition of a custom and usage among distilleries and feeders of slop that the slop should be delivered in a feeding lot adapted and fitted for the feeding of slop to cattle by partition into suitable pens to prevent crowding, supplied with feeding troughs, tanks, and tubs, so constructed through the pens as to distribute the slop in the most economical way and to the best advantage in feeding cattle. The defendants deny the delivery of slop according to the terms of the contract, or that the plaintiff has complied with the terms of the agreement as alleged. By way of counterclaim defendants say that, in reliance upon the plaintiff's agreement to deliver its slop in such a suitable feeding lot adapted to economically feed same as delivered, and upon notice that plaintiff had provided suitable troughs, tanks, etc., as it was bound to do, they bought 1,421 head of cattle, paying for same $45,922.80, and caused same to be delivered in the feeding lot adjacent to said distillery; but that plaintiff broke its contract, and did not supply a fit and suitable feeding lot properly divided into pens and supplied with suitable troughs, tubs, or tanks, etc., and that this failure to properly adapt said lot for the purpose intended continued for 12 weeks after delivery of slop commenced, at which time plaintiff did fit said place for delivery of slop, as it had bound itself to do. It is averred that plaintiff was notified of its failure to divide said lot into pens and to provide suitable troughs, tubs, etc., 'and repeatedly promised to remedy said defects, and defendants, relying upon said promises, kept their cattle in said insufficient feeding lot, and tried to fatten their cattle as they had contemplated doing when their contract was made, but found themselves unable to do so. ' It is then averred that defendants' cattle were greatly damaged for the want of proper means for feeding and distributing said slop, some dying from crowding and some from starvation, while all suffered and lost weight; that no other slop was procurable; and that, to prevent greater loss, defendants bought grain and hay and fed same at great expense, but that, notwithstanding their efforts, they sustained great loss, and sue by way of counterclaim for the loss and injury resulting, which aggregates some $19,000. The plaintiff filed a general demurrer because no defense to plaintiff's petition or ground for counterclaim was stated. This demurrer was sustained. The defendants declining to plead further, there was judgment for the entire sum sued for.

L. W. McKee, L. C. Willis, and T. L. Edelen, for plaintiffs in error.

C. H. Stoll, for defendant in error.

Before LURTON, SEVERENS, and RICHARDS, Circuit Judges.

LURTON Circuit Judge, after making the foregoing statement of the case, .

Two questions arise upon the demurrer to the answer and counterclaim filed by the defendant in error. The first concerns the terms of the agreement between the parties, and the second the measure of damages for the breach of same by the plaintiff. The first question may fairly be split into two parts: First. To what extent, if any, is the agreement for the sale of slops modified, enlarged, or affected by the agreement for the lease of the ground adjacent to the distillery, made contemporaneously with the other? Second. Was it competent to show the custom and usage in respect to the manner in which distillery slops were delivered for feeding purposes?

The first question is not difficult of solution. The averments of fact in the answer and counterclaim must be taken to be true. If, as averred, Julius Kessler & Co. were acting for the Kentucky Distilleries Company both in leasing the Lillard lot for feeding purposes and in the operation of Cedar Brook Distillery, and if, as averred, the two agreements were negotiated at the same time, and with reference to each other, we may look to both to see how far each is affected or interpreted by the terms of the other. When we do this, when we place the two contracts side by side, and read them together, we can only see that the distilleries company was looking forward to a sale of its slop, possibly to W. F. Lillard, possibly to his brother, or to both as a copartnership, and was by the lease preparing a place to be used by whoever should buy its slops as a feeding lot when slop should be delivered and fed to cattle.

The leasing contract does not in express terms obligate the lessee to divide the lot into pens, or put in pipes, or feeding troughs, tanks, or tubs, or to do any specific thing except to erect and maintain an outside fence. That the lot was leased 'to be used as a cattle feeding lot' can hardly be regarded as a covenant to put in cross-fences, or piping or troughs, or sheds, but as a privilege, with the right to remove all such improvements at the end of the lease. If W. F. Lillard or Lillard Bros. should exercise the right to receive and feed the slops made at Cedar Book Distillery-- a right extended by the contract of leasing-- a different question would arise; for, in the absence of some other agreement between the parties, there would be the question as to the operation of the custom and usage in the sale and delivery of such slop to deliver same in a feeding lot adapted to feeding purposes. But this would be an obligation or term of the agreement which would attach itself as a term of a contract for the sale of slop, and would not grow out of any express or implied obligation found in this contract of leasing. If we assume that Lillard Bros. had the right to take all the slop made by the Cedar Brook Distillery at the market price by virtue of the option contained in the lease agreement, they did not do so. Upon the contrary, they entered into a separate writing, by which they contracted for the slop from a daily consumption of only 1,200 bushels of grain, though it appears that the distillery had a daily mashing capacity of 1,800 bushels. The price for this slop is also settled, and not left to be determined by the market price. Each contract is apparently complete in itself, and needs no reference to the other to be understood.

The pivotal question raised by the demurrer is as to the effect to be given to the averment in the answer that both contracts were made with reference to and in recognition of a custom or usage that parties contracting to sell distillery slops for feeding cattle do so with the mutual understanding that the slop shall be supplied or delivered to a feeding lot supplied with suitable cattle pens equipped with pipes, troughs, tubs and tanks adapted to distribute the slop in a manner for convenient feeding to cattle. The court below was of opinion that upon the facts of this case evidence of such a custom or usage would be inadmissible upon the ground that it would vary or contradict the terms of a written contract, or add a new...