Park Bros. & Co. v. Kelly Axe Mfg. Co.

• Decision Date: 29 January 1892
• Citation: 49 F. 618
• Parties: PARK BROS. & CO., Limited, v. KELLY AXE MANUF'G CO.
• Court: U.S. Court of Appeals — Sixth Circuit

49 F. 618

PARK BROS. & CO., Limited, v. KELLY AXE MANUF'G CO.

United States Court of Appeals, Sixth Circuit.

January 29, 1892

Humphrey & Davie, for plaintiff in error.

A Barnett and Walter Evans, for defendant in error.

Before JACKSON, Circuit Judge, and SAGE and SWAN, District Judges.

JACKSON Circuit Judge.

It appears from the record in this case that on December 9 1887, the plaintiff in error submitted to the defendant in error, a Kentucky corporation, located and doing business at Louisville, in said state, the following written proposition:

'We propose to supply you with all the axe and hatchet steel, of good and suitable quality, you will use in your works prior to December 31, 1888, not to exceed 125 net tons, nor be less than 100 net tons, at 8 1/2 cents per pound. The above price is guarantied against our own and association decline on the undelivered portion of this contract at the date of said decline. Terms: Four-months note, or 3 per cent. discount for cash in 30 days from date of shipment. Deliveries to be made f.o.b. Pittsburgh, less freight to Louisville, Ky. To be specified for as follows, at the rate of 10 tons per month. In the event of serious fire, strikes, or delays, unavoidable or beyond our control, the provisions of this contract shall cease until such cause shall have been removed. In case any shipment of steel proves unsuitable, it is understood that you will immediately discontinue its use, and advise you (us) of the facts, that we may have the opportunity of deciding what shall be done under the circumstances, so that possible loss and damage to either you or ourselves shall be prevented.'

This proposition was signed, 'Park Brothers & Co., (Limited.) JOHN A. SUTTON,' and was dated at Louisville, Ky., where it was submitted to and accepted in writing by the Kelly Axe Manufacturing Company. Thereafter, plaintiff proceeded with the delivery of the steel, and when 80,097 pounds thereof had been received, the defendant declined and refused to accept the balance, amounting to 119,903 pounds, which plaintiff alleges was duly tendered. Partial payments were made by defendant on 80,097 pounds received, leaving a balance due thereon of $1,756.54 according to the contract price, which defendant refused to pay. The plaintiff thereupon instituted this suit in July, 1889, against the defendant, to recover the sum of $5,120.32, with interest thereon from January 1, 1889, as the damages sustained by its alleged breaches of said contract. The first count of the original petition or declaration claims the sum of $3,363.78 as the net profit the plaintiff would have made upon the 119,903 pounds of steel which was tendered to and refused by defendant; said net profit being the alleged differences between the cost of producing that quality of steel, with the freight thereon to Louisville, Ky., from Pittsburgh, and the contract price of 8 1/2 cents per pound to be paid therefor. The second count of the petition seeks to recover the unpaid balance of $1,756.54 on the 80,097 pounds received and accepted. In the petition or declaration the plaintiff avers that it is and was at all times a corporation established and existing by and under authority of the law of the state of Pennsylvania, with power and rights, under the laws of said state, to contract and be contracted with, to sell and be sold; that since its creation it has had and still has its office and place of business at Pittsburgh, in said state of Pennsylvania, of which it is a citizen. The defendant is alleged to be a corporation and citizen of Kentucky.

The defendant demurred to this petition, setting up as grounds of demurrer-- First, that the sum claimed in either or both paragraphs (or counts) of the petition was not sufficient in amount to bring the subject-matter within the jurisdiction of the court; second, that said petition, and neither paragraph thereof, states facts sufficient to constitute any cause of action as against defendant. This demurrer was properly overruled and disallowed by the court, for the reason that the petition claimed more than $2,000 for the alleged breach of the contract, and because, if the two counts could be regarded as presenting two distinct causes of action, they could properly be joined in one suit under the Kentucky Code, so as to make the 'matter in dispute' sufficient to give the court jurisdiction. The theory of the demurrant was that the measure of damage set up in the first paragraph of the petition for non-acceptance of the 119,903 pounds of steel tendered, was stated in a way that would only entitle plaintiff to nominal damages, which, added to the $1,756.54 claimed by the second paragraph, would be less than the $2,000 requisite to confer jurisdiction. This was clearly an erroneous view to take of the petition, which claimed against defendant the sum of $5,120.32 for the breaches complained of, and the court below was right in overruling the demurrer.

Thereafter the plaintiff, by leave of the court, amended the first paragraph of its petition, and alleged, in substance, that defendant's refusal to accept the 119,903 pounds tendered it under the contract was not because of any alleged unsuitableness of said steel; that, by reason of said refusal, plaintiff had been compelled to and had disposed of said 119,903 pounds of steel at the best market price procurable for the same, which was 5 3/4 cents per pound; and that after allowing defendant credit for the sum thus realized, and the further credit of $233.31 as the freight on said quantity of steel to Louisville, Ky., and charging it with the contract price of 8 1/2 cents per pound on the same the difference amounted to $3,064.02, which, with interest since December 31, 1888, constituted plaintiff's damage for the non-acceptance by defendant of the 119,903 pounds of steel. To the petition as thus amended the defendant interposed several defenses. By the first paragraph of its answer, it denied plaintiff's corporate existence. By the second, after admitting the written agreement sued on, and its acceptance thereof, it denied that plaintiff had prepared or offered to it axe and hatchet steel in quantities of 10 tons per month, or any quantity, during the period covered by said agreement, of good and suitable quality, needed in its work; that plaintiff had tendered the 119,903 pounds of steel free on board the cars at Pittsburgh, or any part of it good or suitable for use in its factory; that it had refused any tender of such steel; that the cost of manufacturing such steel was 5 cents per pound; that there was any profit to plaintiff in making such steel, as claimed; that its refusal to accept the steel was not caused by its unsuitableness; that plaintiff had the right, under said contract, to deliver within the year ending December 31, 1888, the 119,903 pounds of steel, or any part thereof, or to receive 8 1/2 cents per pound therefor; that plaintiff was, by its refusal or failure to accept said steel, compelled to dispose to the same; that the market price thereof, after its alleged refusal to accept, was 53/4 cents per pound; that the steel was disposed of at that price; and that the sum claimed by plaintiff was due from it. By the third paragraph the defendant set up as a special defense that the plaintiff and the other makers of steel throughout the United States had about and before December, 1887, entered into a trust combination to raise the price of said steel from 6 cents per pound, which was a reasonable price, and afforded a reasonable profit to the steel-makers, to 8 1/2 cents per pound; that defendant having a large axe and hatchet factory, in which much money was invested and numerous operatives were employed, was forced to sign said contract with plaintiff in order to procure the supply of steel needed to carry on its works; that 8 1/2 cents per pound was more than the steel was worth, and was an unreasonable price therefor; extorted from defendant under said trust combination; and that it was not, therefore, bound by said contract to pay said price, but was only liable for the actual value of the steel delivered to it, which was of no value. By the fourth paragraph, it was alleged that the use of the 80,097 pounds of steel delivered to and received by defendant had resulted in or caused a loss and damage to its business, occasioned by the trade rejecting and refusing to handle its axes and hatchets because of the inferior quality of said steel employed in making the same, etc.; and for this damage a counter-claim of $10,000 was set up. By the fifth paragraph of its answer the defendant averred that plaintiff was a joint-stock association, known as a partnership, (limited,) organized under an act of Pennsylvania passed June 2, 1874, with power to sue and be sued in the firm name of Park Bros., Limited; that plaintiff and defendant attempted to make the contract sued on, but that the same was and is from the first null and void; that plaintiff, under said act of June 2, 1874, had no power to make any contract, for the non-performance of which it could be subjected to a liability in excess of $500, unless such contract was reduced to writing, and signed by at least two managers of said association; that the written contract declared on was not signed by any manager or managers of said association, and that said John A. Sutton, who claimed to be the agent of said association, in fact had no authority to bind it; and that, as said contract subjected plaintiff to a liability in excess of $500, it was null and void, and defendant was not bound thereby. To these special defenses, constituting the 3d, 4th, and 5th paragraphs of the answer, the plaintiff demurred on the grounds that they, nor either of the, presented any defense or cause of action. ...