Rehm-Zeiher Co. v. F.G. Walker Co.

• Decision Date: 20 November 1913
• Citation: 160 S.W. 777,156 Ky. 6
• Parties: REHM-ZEIHER CO. v. F. G. WALKER CO.
• Court: Kentucky Court of Appeals

160 S.W. 777

156 Ky. 6

REHM-ZEIHER CO. v. F. G. WALKER CO.

Court of Appeals of Kentucky.

November 20, 1913

Appeal from Circuit Court, Jefferson County, Common Pleas Branch Fourth Division.

Action by the Rehm-Zeiher Company against the F. G. Walker Company. Judgment for defendant, and plaintiff appeals. Affirmed.

Fred Forcht, Jr., and Humphrey, Middleton & Humphrey, all of Louisville, for appellant.

Joseph Selligman, of Louisville, for appellee.

CARROLL J.

The appellant, a corporation, in the years 1908, 1909, 1910 1911, and 1912, and prior thereto, was engaged in the business of selling whisky; that is to say, it purchased from distillers certain brands and quantities of whisky, and then sold the whisky so bought to the trade. The appellee, during the years named, and prior thereto, owned and operated a distillery. In 1908 the parties entered into the following contract: "This contract made and entered into this November 17, 1908, by and between the F. G. Walker Company of Bardstown, Nelson county, Kentucky, a corporation, party of the first part, and the Rehm-Zeiher Company, of Louisville, Jefferson county, Kentucky, party of the second part. The party of the first part has this day sold to the party of the second part 2,000 cases of old Walker whisky put up under a private brand, to be delivered during the years 1909, 3,000 cases to be delivered during the year 1910, 4,000 cases to be delivered during the year 1911, and 5,000 cases to be delivered during the year 1912, at the following prices: Quarts bottled in bond, $6.70; pints bottled in bond, $7.20; half pints bottled in bond, $7.70. Should the party of the first part lose by fire the whisky with which this bottling is to be done or the bottling room during the life of this contract, then they are to be held excusable for not filling same. If for any unforeseen reason the party of the second part find that they cannot use the full amount of the above-named goods, the party of the first part agrees to release them from the contract for the amount desired by party of the second part."

In 1912 the appellant brought this suit against the appellee to recover damages for its failure to furnish 2,596 cases of the 4,000 cases of whisky it was provided in the contract should be furnished in 1911. The petition averred that during the year 1911 the appellant demanded that the appellee furnish to it 4,000 cases of old Walker whisky, but that in violation of its contract the appellee only furnished 1,044 cases, and refused to furnish the remainder, to its damage in the sum of $6,798, which sum it averred was the loss it sustained by the failure of the appellee to furnish the 2,596 cases it failed and refused to furnish.

After a demurrer had been overruled, an answer was filed, setting up various defenses, which were controverted by a reply, and the parties went to trial before a jury. After the evidence for the appellant had been concluded, the lower court directed a verdict in favor of the appellee, upon the ground that the contract was lacking in mutuality, and therefore could not be made the subject of an action for its breach by either party. On this appeal the only question we need concern ourselves with is the one upon which the trial judge rested his opinion, that the appellant could not recover.

It appears without contradiction that in 1909 the appellant only ordered and received 786 cases of the 2,000 called for by the contract, and that in 1910 it only ordered and received 1,200 cases of the 3,000 cases called for by the contract, and that the appellee did not demand or request that it should take in either of these years the full number of cases specified in the contract or any greater number than it did take. It further appears that in the early part of 1911 whisky advanced in price, and the appellee refused to deliver to the appellant whisky it ordered. After this, however, the appellee, upon request, furnished to the appellant 1,044 cases of the 1911 whisky; but in September, 1911, it peremptorily refused to furnish any more, and thereupon this suit was brought.

O. E. Rehm, president of the appellant corporation, testified that his company had been in business since 1904, and that in 1908 he and R. H. Edelen, president of the F. G. Walker Company, had several conversations relating to the subject of the Walker Company furnishing to his firm certain quantities of whisky, and that following these conversations Edelen, in November, 1908, prepared and presented to him the written contract heretofore quoted. He further testifies that, when Edelen brought the contract to him, "He said, 'Read this; I believe you could use this whisky.' I said, 'That is too much whisky for us; we are a young firm just building up our trade, and I don't believe we can use it.' After I told him it was too much whisky, he said, 'You don't have to take it all if you can't use it; you are a growing firm; your business will increase that much.' And I signed it." He also testified that the whisky was to be bottled under the name "Fernwood," a private brand owned by his concern. He further testified: "Q. Under what brand was the whisky bottled by the F. G. Walker Company? A. Fernwood. Q. Who notified them to that effect? A. We did. Q. Who had the labels made? A. Mr. Edelen. Q. Who had the name F. G. Walker put in large lines on the front of the label? A. Mr. Edelen had the labels made. He paid for them. Q. Did you have anything to do with telling them how to make the label, or where to put his name? A. I did not. *** Q. You signed the contract with the understanding you didn't have to use the whisky if you didn't need it, didn't you? A. The contract states that. Q. You could use as little or as much as you wanted; was that the understanding with which you signed this contract? A. That is what the contract states. Q. If you did not need any, you did not have to take any? A. We used all the Walker whisky; all of our Fernwood was to be bottled at his distillery. Q. If you did not sell any, you did not need to take any whisky? A. We were going to sell it. Q. You expected to try to sell it? A. Yes, sir. Q. Did you understand you were obligated to take 2,000 cases during 1909? A. That is, if we could not sell that, we were not obligated. Q. Did you understand that during 1910 you were to take 3,000 cases? A. Yes, sir. Q. That you had to take that many? A. No, sir. Q. Did you understand that, if you did not need it, you would not have to take it? A. Yes; for any unforeseen reason. Q. What were some of the unforeseen reasons spoken of, if any? A. Wasn't any. Q. Your understanding was you were only to take as much as needed? A. Yes, sir. Q. He had to give it to you, but you did not have to take it from him? A. I don't know about that; if for any unforeseen reason we could not use it. Q. What was the character of the unforeseen reason you understood might happen? A. I don't know that I understood anything at the time. Q. Well, now, during the year 1909 how much of this whisky did you buy? A. The figures there will show. Q. Is that all you ordered that year? A. Yes, sir. Q. That is all you wanted to buy that year? A. Yes, sir. Q. That is all you would have to buy that year? A. All we sold. Q. What reason prevented you from taking the other 1,214 case that year? A. Did not sell them. Q. Was that because you did not want them? A. Did not sell them. Q. That was the unforeseen reason that was referred to in this contract? A. Yes, sir."

This witness was asked and answered a great many other questions relating to the matter in controversy; but the foregoing sufficiently illustrate the question at issue in this case. It will be observed that the contract specifies that the whisky was to be "put up under a private brand," but does not mention the name of the brand. It appears, however, from the evidence of Rehm that his firm ordered this whisky to be bottled by the F. G. Walker Company under the name "Fernwood," and that under this brand or name all of the whisky furnished by the F. G. Walker Company in 1909, 1910, and 1911 was sold. It is further shown by his evidence that his firm was only obliged under the contract to take each year such number of cases of whisky as it could sell to the trade under the brand "Fernwood," and that during the years 1909 and 1910 it only requested the delivery of the number of cases furnished in those years. It is further made plain by his evidence that his firm was only obliged by the contract to take each year as many cases as it wanted. In short, if it did not find it profitable in its business to handle any of the whisky provided for in the contract, it was not obligated to take any of it. It was entirely optional with it whether it took any of the whisky or not. This, according to the evidence of Rehm, is what the words "unforeseen reason" in the contract meant.

We have referred at this length to the evidence of Rehm for the purpose of showing that, according to his understanding of the contract, it did not obligate his firm to take any of the whisky provided for in the contract. Under his construction of the contract it was clearly lacking in mutuality. It may be well, however, to say at this point that we do not put our decision, that this contract was so lacking in mutuality as not to be enforceable upon the construction placed upon it by Rehm. We think the terms of the contract itself show that it is what is called a unilateral contract; in other words, a contract binding only one of the parties to do anything. Although it is apparently conceded that the contract on its face is unilateral, the effort is made to take it out of the rule of nonenforceability by either party, upon the ground that the conduct of the parties in executing the contract shows that it was...