Luckenbach S.S. Co., Inc. v. W.R. Grace & Co., Inc.

• Decision Date: 06 July 1920
• Docket Number: 1769.
• Citation: 267 F. 676
• Parties: LUCKENBACH S.S. CO., Inc., et al. v. W. R. GRACE & CO., Inc.
• Court: U.S. Court of Appeals — Fourth Circuit

267 F. 676

LUCKENBACH S.S. CO., Inc., et al. v. W. R. GRACE & CO., Inc.

No. 1769.

United States Court of Appeals, Fourth Circuit.

July 6, 1920

Peter S. Carter and Oscar R. Houston, both of New York City (Carter & Carter, of New York City, Harry E. McCoy, of Norfolk, Va and Israel A. Washburne, of New York City, on the brief), for appellants.

John M Woolsey, of New York City (Kirlin, Woolsey & Hickox, of New York City, Edward R. Baird, Jr., of Norfolk, Va., and Harrison Lillibridge, of New York City, on the brief), for appellee.

Before KNAPP and WOODS, Circuit Judges, and WATKINS, District Judge.

KNAPP Circuit Judge.

The case in outline is this: On October 25, 1916, the appellant Luckenbach Steamship Company, a Delaware corporation, entered into a written contract with the appellee, W. R. Grace & Co. a Connecticut corporation, whereby the former agreed to provide freight room and carry for the latter, between December 1, 1916, and July 31, 1917, 75,000 tons, 10 per cent., more or less, at the option of the steamship company of nitrate and/or ores from designated ports in Chile to a port of the United States Savannah-Boston range; the appellee agreeing to pay therefor $15.50, United States gold, per ton of 2,240 pounds, delivered. Under this contract the steamship company carried one cargo, of 5,998 tons, delivered at the port of New York about the 1st of May, 1917, and no more. In a letter to that company under date of April 21, 1917, the appellee asked to be advised of the position of certain steamers named, and when they would be ready to load with nitrate, and on the 23d, two days later, this reply was sent:

'Your letter of the 21st in reference to freight contract nitrate of soda received and contents noted. In answering the same, beg to inform you that we cannot carry out this freight room contract, which was supplemented by the usual form of nitrate charter party adopted and used by your company, and which usual form of nitrate charter party was made a part of the freight room contract, for the reason that a state of war exists between this government and the government of Germany, and we are released under article 13 of this nitrate charter party reading: 'The * * * enemies, pirates, * * * arrest and restraint of princes, rulers, and people, political disturbance or impediments * * * always mutually excepted."

Not long afterwards, on June 7, 1917, the appellee filed the libel and complaint herein, to recover damages for breach of contract, against the Luckenbach Steamship Company and the Luckenbach Company, charging the latter with liability because the two companies were 'maintained and managed as one corporation,' and alleging certain facts in that regard which presently will be stated. Accompanying the libel were a number of interrogatories, addressed to the respondents severally, which they were called upon to answer under oath. A monition was issued, as prayed for in the libel, and the marshal attached the steamer Florence Luckenbach, owned by the Luckenbach Company, and leased to the Luckenbach Steamship Company, which was then discharging cargo in the harbor of Norfolk, Va. A few days later the respondents entered a general appearance and filed a bond, under which the steamer was released. In August following each of them filed an answer to the libel, and also answers to the several interrogatories.

To these answers the appellee filed exceptions, on the ground that the facts therein stated did not constitute a defense to the cause of action alleged in the libel, and on that ground the exceptions were sustained, as appears from the opinion of the learned District Judge filed in March, 1918. 248 F. 953. The order thereupon entered, however, granted the respondents 15 days in which 'to answer over, or make such valid defense, if any they have, as they may be advised. ' On their failure to answer further within the time allowed, an interlocutory decree was entered, adjudging the respondents and each of them liable for the damages suffered by the appellee, and appointing a commissioner to ascertain the amount thereof, with directions to return 'a report of his findings and conclusions, together with the evidence and exhibits upon which they are based.'

In November, 1918, the commissioner submitted an elaborate report, in which he reviews the evidence at some length and fully explains his reasons for fixing the damages, as he does, at $1,311,059.16, with interest from November 1, 1917. Exceptions were filed by both parties, but all of them were overruled, and confirmation of the report ordered in a brief opinion, which quotes the report in full, filed in May, 1919. 258 F. 49. Final decree was entered accordingly, on June 26, 1919, from which the respondents bring this appeal.

With this recital of the proceedings in the court below, we pass to such discussion as seems to be appropriate of the various grounds on which the appellants ask reversal of the decree.

1. Is the contract valid?

The contention that it is not rests on this clause in one of the articles:

'All quantities and deliveries to be mutually arranged between the party of the first part and the party of the second part, to suit the steamers of the party of the first part.'

And the argument is that thereby the contract was rendered so imperfect and incomplete as not to be enforceable, under the rule that a contract which leaves something for future agreement, though otherwise definite and certain, is not binding on the parties. It would be enough to say in reply that the steamship company makes no such claim in the letter of April, 1917, refusing performance, or in its previous correspondence with the appellee. On the contrary, it assumes in that letter, as it had before, that the contract was in all respects complete and valid, and would have to be carried out, except for the reason therein stated.

Nor does the answer of the steamship company set up any such defense. True, the clause in question is quoted in the answer; but the allegations based thereon are merely to the effect that the company had many other commitments for its steamers, to which the performance of this contract had to be adjusted, as Grace & Co. well knew; that at the time the contract was executed it was impossible to tell when the steamers would be released from such commitments; and that 'from time to time after October 26, 1916, the time for this respondent to furnish steamships was discussed with the libelant, and such time was, from time to time, extended by mutual agreement until after the 6th of April, 1917. ' This discloses the purpose for which the clause was inserted in the contract, as plainly appears upon reading the entire provision from which the clause is taken. In short, there is no averment by the steamship company that the stipulation here referred to operated to release it from obligation.

But the further and equally conclusive answer is found in the settled rule of law that one who breaches his contract for reasons specified at the time will not be permitted afterwards, when sued for damages, to set up other and different defenses. This rule has been long established and frequently applied. Thus, in the leading case of Railway Co. v. McCarthy, 96 U.S. 258, often quoted and followed, the Supreme Court says, at page 267 (24 L.Ed. 693):

'Where a party gives a reason for his conduct and decision touching anything involved in a controversy, he cannot, after litigation has begun, change his ground, and put his conduct upon another and a different consideration. He is not permitted thus to mend his hold. He is estopped from doing it by a settled principle of law. Gold v. Banks, 8 Wend. (N.Y.) 562; Holbrook v. White, 24 Wend. (N.Y.) 169; Everett v. Saltus, 15 Wend. (N.Y.) 474; Wright v. Reed, 3 Durnf. & E. 554; Duffy v. O'Donovan, 46 N.Y. 223; Winter v. Coit, 7 N.Y. 288.'

Other illustrative cases, among many, are Oakland Sugar Mill Co. v. Fred W. Wolf Co., 118 F. 239, 55 C.C.A. 93, Goodman v. Purnell, 187 F. 90, 109 C.C.A. 408, Polson Logging Co. v. Neumeyer, 229 F. 705, 144 C.C.A. 115, and Wall Grocer Co. v. Jobbers' Overall Co. (decided by this court January 12, 1920) 264 F. 71.

In its letter of April 23, 1917, above quoted, the steamship company placed its refusal to perform the contract distinctly and...