Madeirense Do Brasil S/A v. Stulman-Emrick Lumber Co.

Decision Date09 January 1945
Docket NumberNo. 108.,108.
Citation147 F.2d 399
CourtU.S. Court of Appeals — Second Circuit

Carl E. Ring, of New York City (Ring & Murray, of New York City, on the brief), for appellant.

Irving Moldauer, of New York City, for appellee.

Before SWAN, CLARK, and FRANK, Circuit Judges.

CLARK, Circuit Judge.

This is an action, brought in the District Court because of the diverse citizenship of the parties, wherein Madeirense do Brasil S/A, a Brazilian corporation, sues to recover the balance due on a shipment of lumber to the defendant, Stulman-Emrick Lumber Co., in New York. In its complaint plaintiff set forth the contract and shipment on which it based its claim, and also explained that a later contract had been cancelled by defendant. It claimed a balance due on the purchase price of $1,078.98 and a refund of "excess freight" charges of $2,490, with interest and costs. In its answer defendant pleaded at length facts hereinafter discussed, to show that it was entitled to deduct from the purchase price the excess freight charges paid by it, and also, by way of counterclaim, asked for damages for breach of the second contract. The case was heard below on cross motions for summary judgment, which placed in issue the meaning of the contracts as to delivery and payment of freight, and particularly whether plaintiff had performed the second contract by tendering delivery to a carrier in Brazil, or in the alternative was excused by a shortage of available ships. The court resolved the issues in defendant's favor and found that defendant should recover damages on its counterclaim of $5,282.50, against which should be offset the balance of $1,078.98, making a total of $4,203.52, with interest from January 31, 1941, and costs. Plaintiff has appealed.

Defendant buys and sells lumber and operates a lumber yard in Brooklyn. Originally there was a second defendant, Brazilian Minerals & Timbers Corporation, a New York lumber broker, who effected the contracts; but plaintiff has dismissed the action against it. Some dispute developed below as to whether Brazilian was plaintiff's or defendant's agent, and hence whether the orders from defendant to Brazilian, rather than those from Brazilian to plaintiff, constituted the real contracts. But, as we shall point out, the differences between these forms were not important enough to change the result, and it is not necessary to determine this question of agency.

The affidavits below brought before the court the extensive communications between Brazilian and each of the parties hereto. It therefore appears by Brazilian's confirmation order to plaintiff of October 15, 1940, that there were sold to defendant 140,000' of Brazilian pine lumber, kiln dried, and 310,000' (later increased to 360,000') of naturally dried lumber, at a price of $40 for the former and $38 for the latter "per 1,000 feet c & f New York," for "immediate shipment up to the 31st day of October at the latest," with inspection "upon arrival of the steamer in New York" and terms of "Letter of credit for 90% of the f.o.b. value, and the balance of 10% after arrival of the shipment in New York, the freight charges of $12.00 per 1000' to be paid in New York for your account." Plaintiff then had trouble in obtaining a ship, the Lamport & Holt line, by which plaintiff had intended to ship, being required by the English government to carry cotton to Canada. Eventually plaintiff was able to make arrangements for a ship from the Lloyd Brasileiro line, subject to the condition that the minimum shipment would be 1,000 tons or 710,000'; and plaintiff, beginning November 22, 1940, urged Brazilian to have its customer increase its purchase to take the minimum. After some negotiations as to price, the second contract was entered into, as shown by Brazilian's confirmation order to plaintiff of December 5, 1940, which was of substantially the same tenor as the first contract, except that it was for 250,000' "naturally dried" lumber at "$40.00 per 1000' C. & F. New York," with "shipment up to December 31, 1940 at the latest" and with the terms changed to substitute $14 for $12 for the freight charges to be paid on arrival. And the contract called for "clean lumber, perfectly dried," free from knots or other defects. As the correspondence showed, the increase of $2 per 1,000' over the earlier contract was demanded by plaintiff because of the increase in shipping rates.

Plaintiff, however, still found difficulty in procuring shipping, and on January 8, 1941, cabled that Lloyd's would take only the lumber of the first contract below deck, while the other could be loaded only on deck at "buyer's responsibility" for "any deterioration." Brazilian immediately cabled that the pine "on deck" was absolutely unacceptable, and that only the lumber under deck should be shipped. This it reiterated by letter, demanding dried lumber and shipment by another steamer. On January 9, 1941, plaintiff wrote asking for cancellation of this order, since Lloyd's had now increased the freight rate to $33.13 per 1,000'. Brazilian cabled on January 22, 1941, that it was impossible to cancel the contract, as buyers demanded compliance, and asked plaintiff to "cable urgent date of shipment." There were further demands for shipment; but under date of January 23, 1941, plaintiff refused to ship unless the increase in the freight rate was "for account of the buyer," and suggested that claim be filed with the Brazilian embassy in Washington. On March 4, Brazilian wrote plaintiff that the first shipment was being unloaded that day, and again said that the buyers allege that they cannot excuse delivery of the 250,000' "under penalty of much more considerable losses." Plaintiff replied March 12, 1941, that "as we had already written you, this lot is definitely cancelled on account of force majeure, which compels us to do so against our will."

In this action plaintiff contends that it did not breach the contract relating to the second lot of lumber, because defendant's refusal to allow shipment thereof on deck amounted to a cancellation of the contract. This contention is predicated in turn on its claim that it never became obligated to ship the lumber below deck. Defendant relies particularly on its order to Brazilian which definitely provided that "all lumber shipped by vessel must be stowed below deck," while plaintiff points to the absence of that provision in the order given it by Brazilian, and objects to the decision of the District Court holding it to this later order because Brazilian was its agent. But we think the same result follows from the contract plaintiff signed. Lumber shipped on deck would hardly meet the express requirements of this contract for lumber "naturally dried" and for "clean lumber, perfectly dried." If the matter were at all doubtful, it was made clear by plaintiff's obvious conclusion that it did not have the right, as shown by its cable of January 8, 1941, in effect asking for authority to ship above deck at buyer's responsibility for any deterioration and adding, "We do not know of another carrier."

Plaintiff argues further that it has duly performed because a c. & f. contract requires it only to deliver, or to tender delivery of, the lumber to a carrier in Brazil. The term "c. & f." means that the price includes in a lump sum "cost" and "freight" to the named destination. Segall v. Finlay, 245 N. Y. 61, 156 N.E. 97, affirming 126 Misc. 625, 213 N.Y.S. 540; Id., 218 App. Div. 723, 218 N.Y.S. 895; The Hans Maersk, 2 Cir., 266 F. 806, 810, 811; Uniform Revised Sales Act, Proposed Final Draft No. 1, 1944, § 45, with comments by Professor Llewellyn, the Reporter, and his Advisers, pp. 177-179, citing and discussing the authorities. The term "c. & f." thus either requires the seller to prepay the freight or permits the buyer after having paid the actual charges to deduct them from the price, in either case putting the seller under an ultimate obligation to pay for the transportation. Ordinarily where the seller pays the freight, there is an inference under Rule 5 of § 19 of the Uniform Sales Act, N. Y. Personal Property Law, Consol.Laws, c. 41, § 100, rule 5, that the parties intend no passage of title until the goods reach the destination to which freight is paid. But commercial usage, recognized by the courts and text writers, is that under a c. & f. contract the seller fulfills his duty on shipment of the goods, and that the risk thereafter is on the buyer unless other terms of the contract indicate a contrary intention. Segall v. Finlay, supra; Twitchell-Champlin Co. v. Radovsky, 207 Mass. 72, 92 N.E. 1038; 1 Williston, Sales, 2d Ed., 621; Uniform Revised Sales Act, supra, § 45(2) (a), (3), (4), and comment p. 178. In Pittsburgh Provision & Packing Co. v. Cudahy Packing Co., 260 Pa. 135, 103 A. 548, 549, a case criticized in the comments to the proposed Uniform Revised Sales Act, "c. a. f." was erroneously translated as "cash and freight" and as "having apparently the same significance as f. o. b." destination. Unlike the latter, however, the general understanding is that the freight figures substantially only as a part of the purchase price, not as a reservation of title, and that the situation is similar to that of a c. i. f. contract, that is, one for "cost, insurance, and freight" to the designated destination.

Indeed, here the necessary inference is the same as that for a c. i. f. contract, since the documents showed that insurance was to be effected by the buyer. Hence the risk during transit is upon the buyer, thus indicating an intention that title is to pass upon shipment and, as in the c. i. f. contracts, requiring delivery to a carrier only. Seaver v. Lindsay Light Co., 233 N.Y. 273, 135 N.E. 329; Cundhill v. A. W. Millhauser Corporation, 257 N.Y. 416, 178 N.E. 680; Jacob Glass, Inc. v. Banca Marmorosch Blank & Co., Soc. Anon., 122 Misc. 637, 204 N.Y.S. 636; ...

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