Louisville Soap Co. v. Taylor

• Decision Date: 17 March 1922
• Docket Number: 3593.
• Parties: LOUISVILLE SOAP CO. v. TAYLOR et al. [1]
• Court: U.S. Court of Appeals — Sixth Circuit

279 F. 470

LOUISVILLE SOAP CO. v. TAYLOR et al. ^[1]

No. 3593.

United States Court of Appeals, Sixth Circuit.

March 17, 1922

Charles G. Middleton, of Louisville, Ky. (Edward P. Humphrey and Humphrey, Crawford & Middleton, all of Louisville, Ky., on the brief), for plaintiff in error.

John C Doolan, of Louisville, Ky. (Trabue, Doolan, Helm & Helm, of Louisville, Ky., on the brief), for defendants in error.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

DONAHUE Circuit Judge.

Taylor Lowenstein & Co. brought action in the District Court for the Western District of Kentucky against the Louisville Soap Company to recover damages for breach of contract of sale by plaintiff to defendant of a quantity of standard quality grades G, H, and I rosin. The defendant's cross-petition is based upon its construction of this contract in reference to price, and seeks to recover payments in excess of the contract price.

The record presents but two questions: First. As to the quantity of rosin covered by the contract. Second. The price to be paid therefor.

The provision of the contract in reference to quantity is as follows:

'Louisville Soap Company's requirements from April 1, 1918, to March 31, 1919, 20,000 round barrels minimum, 40,000 round barrels maximum. Should buyer's requirements be for more than the maximum amount stipulated herein, orders for such excess are to be submitted to seller. If seller cannot supply, buyer will be privileged to buy such excess elsewhere.'

The provision in the contract with reference to price is as follows:

'To be 50c. per 280 lbs. over the official closing Savannah, Ga., market on date order is received at Mobile, Ala. In the event of two closing prices, the average is to apply.'

Under this contract the soap company ordered and received, within the year, 12,989 round barrels of rosin, for which it paid in full, and which amount constituted its entire requirements. Taylor, Lowenstein & Co. brought this action to recover damages for the failure of the soap company to take 7,011 round barrels, the difference between the amount it did actually order, receive, and pay for, and the minimum amount of 20,000 round barrels specified in the contract.

It is the contention of the soap company that this is a requirement contract, and that the provision '20,000 round barrels minimum, 40,000 round barrels maximum' is a mere estimate of the amount of rosin it would require from April 1, 1918, to March 31, 1919, and that therefore it was not obligated by this contract to take any rosin in excess of its actual requirements; that the provision in the contract that it was to pay the plaintiff the market price, to be determined by the official closing of the Savannah, Ga., market on date order is received, instead of a fixed, definite, and certain contract price to be paid, regardless of the market price, further evidences the intentions of the parties that the actual requirements of the soap company was the dominant provision of the contract as to quantity.

It is the claim of Taylor, Lowenstein & Co. that the soap company was required by this contract to accept and pay for this minimum amount of 20,000 round barrels, regardless of its requirements, and as many more barrels as it required for use in its factory; that the provision in reference to requirements applied only to the difference between the minimum 20,000 round barrels and the maximum 40,000 round barrels, which maximum quantity Taylor, Lowenstein & Co. obligated itself to furnish the soap company if the requirements would amount to so many barrels, and if the soap company's requirements exceeded the maximum amount then it had the right to elect whether or not it would accept or reject any orders in excess thereof.

At first glance there would seem to be an irreconcilable conflict between the authorities cited by opposing counsel in support of their respective claims. However, a careful study of these cases discloses that each was decided in reference to the particular contract involved, or, as said by Mr. Justice Holmes in Smoot v. U.S., 237 U.S. 38, 35 Sup.Ct. 540, 59 L.Ed. 829, upon a consideration of the 'obviously dominant measure of quantity' in each contract. In the case of Brawley v. U.S., 96 U.S. 168, 24 L.Ed. 622, the estimated amount was 880 cords of wood, more or less, but the contract later specifically provided that the exact requirements of the United States should be determined by the post commander. The court in that case held that this later provision was the dominant measure of quantity.

In the case of Marx v. American Malting Co., 169 F. 582, 95 C.C.A. 80, this question was a much closer one, but the court held in that case that the extrinsic evidence, offered to aid the court in correctly interpreting the somewhat uncertain and ambiguous language of the contract in this respect, was sufficient to show that it was the intention and purpose of the contracting parties that requirements, and not the estimate, should control.

In Smoot v. U.S., supra, the contract provided for 140,200 cubic yards, more or less, of filter sand, for a specific construction of 29 filter beds. It appeared from the contract itself that the quantity mentioned therein was approximate only. It was insisted, however, upon the part of the United States, that a letter written by the government engineer, subsequent to the contract, specifically fixed the quantity at 151,000 yards. This, however, did not allow for shrinkage, and the actual requirements of the government were 179,231 cubic yards. The Supreme Court held that a letter from the government engineer in charge of the construction, to a contractor, who had entered into a written contract with the United States to furnish material at a specified price, could not modify the original contract or constitute a new one; that under the terms of the original contract the amount named therein was clearly an approximate amount only; and that the needs of the government for this particular construction was the obviously dominant measure of the quantity to be furnished.

In the case of National Publishing Co. v. International Paper Co. (C.C.A.) 269 F. 903, the defendant agreed to furnish to the plaintiff 'the entire supply of half-tone newspaper required to print rotogravure supplements * * * during the period of one year, * * * estimated at 400 tons. ' It is clear that in this case 400 tons was merely an estimate, and not intended by either party as the actual measure of quantity. This is equally true in reference to the contract involved in Kenan, McKay & Spier v. Yorkville Cotton Oil Co., 260 F. 28, 171 C.C.A. 64, which provided for the 'season's output of linters, about 400 bales. ' The court in that case held that 'about 400 bales' was clearly an approximate amount and that the provision 'season's output of linters' was the dominant measure of quantity.

The contract here under consideration does not suggest that the minimum and maximum amounts named therein are merely estimates. On the contrary, from the substantial difference between the minimum and maximum, it would appear that the parties intended that the requirements should control between these two amounts, but should be neither more than the maximum nor less than the minimum. In fact it is specifically provided that, if the requirements should exceed the maximum quantity named, the seller should not be obligated to furnish the same, except at its option. This maximum of 40,000 round barrels is, by the terms of the contract itself, specifically fixed as the limit of the seller's liability to furnish. It is therefore a definite controlling quantity and not a mere estimate. It would seem absurd to say that the contracting parties should have intended that the maximum should be the dominant measure of quantity as to the seller's obligation to furnish, but that the minimum should not be the dominant measure of quantity as to the buyer's obligation to take.

The language of this contract is identical with the language of the contract involved in Diamond Alkali Co. v. AEtna Explosives Co., 264 Pa. 304, 107 A. 711, 7 A.L.R. 495, in which case the contract provided, in reference to the quantity, 'Buyer's entire requirements during 1916; minimum quantity 180 tons per month and maximum 250 tons monthly. ' In that case the court held:

'The minimum and maximum quantities fixed in the contract were not merely probable estimates of the quantities which the appellant was to take, as was the case in Marx v. American Malting Co., 169 F. 582, one of the authorities relied upon by learned counsel for appellee, but were definitely fixed quantities which the appellant could demand and the appellee was required to deliver.'

In the case of Staver Carriage Co. v. Park Steel Co., 104 F. 200, 43 C.C.A. 471, the contract as to quantity provided:

'All the tire steel, of good and suitable quality, which will be used in buyer's works prior to September 1, 1899, not to exceed 14,000 sets, nor to be less than 10,000 sets.'

The court held that this was a valid and binding contract within the different amounts specified; that the buyer was obligated to furnish at least the 10,000 sets and as many more up to 14,000 sets as was actually needed for use in the buyer's work prior to September 1, 1899-- citing in support of this construction National Furnace Co. v. Keystone Mfg. Co., 110 Ill. 427; Minnesota Lumber Co. v. Whitebreast Coal Co., 160 Ill. 85, 43 N.E. 774, 31 L.R.A. 529. See, also, Staver Carriage Co. v. Park Steel Co., 220 Ill. 412, 77 N.E. 174.

In the case of Budge v. United Smelting Company, 104 F 498, 43 C.C.A. 665, the contract required the seller to furnish 'all the mining timbers required and used at buyer's mine, about 600 pieces of...