Mat'n Alkali W'Ks v. V.B.C.C.

• Citation: 147 Va. 125
• Parties: MATHIESON ALKALI WORKS, ET ALS. v. VIRGINIA BANNER COAL CORP., ET ALS.
• Decision Date: 20 January 1927
• Court: Supreme Court of Virginia

Page 125

147 Va. 125

MATHIESON ALKALI WORKS, ET ALS. v. VIRGINIA BANNER COAL CORP., ET ALS.

Supreme Court of Virginia, Richmond.

January 20, 1927.

1. PAROL EVIDENCE — Construction of Requirement Contract — Case at Bar. — The instant case arose from a contract between an alkali company and a coal corporation, under which the alkali company agreed to buy and the coal corporation agreed to sell during a term of years "the annual requirements of coal of the alkali works, estimated approximately at 200,000 tons per annum, to be delivered as specified by the alkali company."

Held: That there was no such ambiguity upon the question of quantity as would admit of the introduction of parol evidence to aid in the construction of the contract.

2. PAROL EVIDENCE — General Rule. — Parol testimony cannot be received to contradict, vary, add to or subtract from the terms of a valid written instrument. Extrinsic evidence to determine the sense in which language is used is inadmissible unless the contract is ambiguous.

3. PAROL EVIDENCE — Written Contract Deemed to Express the Entire Meaning of the Parties — Prior Conversations and Parol Agreements. — Where there is no imperfection or ambiguity in the language of a contract, it will be deemed to express the entire and exact meaning of the parties, that every material part of the contractis therein expressed. On the same principle all conversations and parol agreements between parties prior to the written agreement are so merged therein that they cannot be given in evidence for the purpose of changing the contract or showing an intention or understanding different from that expressed in the written agreement.

4. SALES — Construction of Contract — Sale of Coal to Meet the "Requirements" of an Alkali Works — Case at Bar. — The instant case arose from a contract between an alkali company and a coal corporation under which the alkali company agreed to buy and the coal corporation agreed to sell during a term of years "the annual requirements of coal of the alkali works, estimated approximately at 200,000 tons per annum, to be delivered as specified by the alkali company." The coal company asserted that this was a tonnage contract for 200,000 tons a year, but the terms used in the contract have been almost universally held to express an agreement for requirements only; and the plain language of the contract shows it to be a "requirements" contract. The presence of the estimate does not change the "requirements" character of the contract.

5. SALES — Construction of Contract — "Requirements" Contract. — Where a contract of sale provides for the furnishing of "requirements" for a given time, followed by an estimate, about, approximately, more or less, or expressions of like import, the word "requirements" is regarded as the determinative or dominant measure of the quantity contracted for and the subsequent language as merely an estimate.

6. SALES — Construction of Contract — "Requirements" Contract. — Where a contract of sale provides for the furnishing of the "requirements" of the buyer for a given time followed by an estimate of such "requirements," if the contract was for a definite quantity or approximately a definite quantity, why were so many words used to express this very simple idea? The answer is that the parties must have meant the added words to mean something when they were inserted in the contract. They cannot later, when controversies arise, ask the courts to cast them aside as meaningless.

7. SALES — "Requirements" Contract — Uncertainty of Contract. — The phrase "requirements" in a contract to furnish the "requirements" of the buyer for a given time is not too uncertain in itself to constitute the subject matter of a contract.

8. SALES — Construction of "Requirements" Contract — Case at Bar. — The instant case arose from a contract between an alkali company and a coal corporation, under which the alkali company agreed to buy and the coal corporation agreed to sell during a term of years "the annual requirements of coal of the alkali works, estimated approximately at 200,000 tons per annum, to be delivered, as specified by the alkali company," in approximately equal monthly installments, of the following proportions and grades: 133,000 tons of nut and slack coal * * * 67,000 tons of egg and lump coal * * *." The coal company contended that these two quantities which make up 200,000 tons indicated that precisely that annual quantity was the subject matter of the contract, but this argument overlooked the force of the word "proportions" in this connection. The use of that word shows that the figures given merely expressed a ratio and not absolute quantities. Otherwise the language should have been "of the following amounts and grades."

9. SALES — "Requirements" Contracts — Good Faith. — Where the quantity of the subject of the sale is the "requirements" of the purchaser a willful and arbitrary juggling of "requirements" of the purchaser will not be countenanced. A contract for "requirements" is not a contract for such quantity as the purchaser may see fit to order, but a contract for such quantity as is requisite to supply its reasonable wants. Execution in good faith is required of the purchaser; the courts are zealous to guard against any injustice or inequality which might arise out of such contracts.

10. SALES — "Requirements" Contract — Parol Evidence — Case at Bar. — The instant case arose from a contract between an alkali company and a coal corporation, under which the alkali company agreed to buy and the coal corporation agreed to sell during a term of years "the annual requirements of coal of the alkali works, estimated approximately at 200,000 tons per annum," to be delivered as specified by the alkali company.

Held: That while parol evidence cannot be introduced, the effect of which would be to strike out the phrase "annual requirements" and the word "estimated," it may be introduced on the merits to show what the bona fide "annual requirements" of the alkali works were.

11. SALES — Specifications Detached from the Contract — Identification — Case at Bar. — The instant case was a "requirements" contract under which seller was to furnish the buyer with the coal required by it of the quality shown from the specifications "hereto attached." When the contract was produced in evidence the specifications were not attached to it.

Held: That the buyer was entitled to identify the specifications which the parties actually agreed upon as fixing the standard of quality; that the quality must conform to such specifications, and that extrinsic evidence of any other standard is inadmissible.

12. CONTRACTS — Construction — Parol Evidence — Instrument Referring to Another Writing. — Where a written instrument contains a reference to some other writing, parol evidence is admissible for the purpose of identifying the writing so referred to.

13. SALES — Price — Parol Evidence — Case at Bar. — The instant case arose out of a sale of coal. As to the price of the coal agreed upon there was no ambiguity in the contract.

Held: That no parol evidence was necessary or competent to explain the price clause or assist in its construction.

14. BILL IN EQUITY — Amended Bill — Contract and Tort. — In the instant case, a suit involving the breach of a contract of sale between complainant and defendant, to allow a claim for damages arising out of an alleged tort to be injected, by amended bill, into the suit for damages for a breach of contract, and in effect permit the change of one section of complainant's cause of action from contract to tort, cannot be permitted.

15. SALES — Supplemental Agreement as to Price — Pleading — Case at Bar. — In the instant case, a suit involving a breach of contract of a sale of coal, at no stage of the proceedings did complainant allege facts sufficient to constitute a cause of action upon any agreement subsequent to the original contract. It was, therefore, error to decree that the price fixed by the original contract was subject to an alleged supplemental agreement as to price.

Appeal from a decree of the Circuit Court of Dickenson county. Decree for complainant. Defendant appeals.

The opinion states the case.

Buchanan & Buchanan, Hutton & Hutton, White Penn & Stuart, Rushmore, Bisbee & Stern, for the appellant.

E. M. Fulton, W. H. Rouse, Walter H. Robertson and Joseph L. Kelly, for the appellees.

CHICHESTER, J., delivered the opinion of the court.

This cause has twice before reached this court upon appeal. The first appeal was dismissed by the appellant (alkali works), the second appeal was dismissed by this court as improvidently awarded (see Mathieson Alkali Works Virginia Banner Coal Corp., etc., 140 Va. 89, 124 S.E. 470). The practical result of this decision was that the chancellor should have construed the contract, which was the basis of the controversy between the alkali works and the coal corporation, before referring the cause to a commissioner to take proof on the issues raised therein. Upon receipt of the mandate from this court the trial court vacated the order of reference, and by decree entered on August 28, 1925, after the taking of much evidence introduced by both parties, the purpose of which was to assist the court in the construction of the contract, construed the contract against the contention of the alkali works. The present appeal is from this decree, and the question involved is the correctness of the construction adopted by the trial court.

In 1917, the coal company owned a lease for a long term on a boundary of coal land, but it had neither funds, plant nor equipment to mine coal and hence was producing none.

The alkali works was an established manufacturing industry operating a large plant and using a large quantity of coal.

On September 1, 1917, a written contract was entered into between the alkali works and the coal company, which provided in substance as follows: First: (a, b, c) The alkali...