Ross Meehan Foundry Co. v. Royer Wheel Co.

• Decision Date: 29 November 1904
• Citation: 83 S.W. 167,113 Tenn. 370
• Parties: ROSS MEEHAN FOUNDRY CO. v. ROYER WHEEL CO. et al.
• Court: Tennessee Supreme Court

83 S.W. 167

113 Tenn. 370

ROSS MEEHAN FOUNDRY CO. v. ROYER WHEEL CO. et al.

Supreme Court of Tennessee.

November 29, 1904

Appeal from Chancery Court, Hamilton County; T. M. McConnell Chancellor.

Suit by the Ross Meehan Foundry Company against the Royer Wheel Company and others. A decree for complainant was affirmed by the Court of Chancery Appeals, and defendants appeal. Affirmed.

Pritchard & Sizer, for appellant Wheel Co. Williams & Lancaster, for appellee Foundry Co.

BEARD C.J.

The controversy in this case grows out of a contract entered into on the 28th March, 1899, between the complainant company and the Royer Wheel Company, by which the first party agreed to make for the second party, from metal patterns to be furnished by the second party, all malleable or other castings required, as set out in the contract, and the second party agreed to order from the first party all such castings as were required by it between the 1st day of September 1899, and the 1st of September, 1903, and to pay for such castings as were delivered under the contract in 60 days from the date of each delivery, or in cash within 10 days thereof with a discount of 2 per cent.

Soon after the making of the contract, disagreements between the parties thereto arose. The Royer Wheel Company complained of delays in the delivery of castings, as well as of defects in some of those delivered, and the foundry company complained of the defendant company for its failure to make payment for deliveries made. Finally, upon the continued delay on the part of the Royer Wheel Company for a term of about nine months to make payment for castings received by it, the Ross Meehan Company notified the Royer Wheel Company that it regarded this nonpayment as such a breach of the contract as relieved it from the obligation to make any future delivery. The present bill was soon thereafter filed upon an open account to recover the value of these castings delivered. The Royer Wheel Company filed an answer, in which it set up the contract, and insisted that the complainant had failed to make deliveries as were required by its terms; that many of the castings furnished were defective; and that by its renunciation of the contract the complainant company had inflicted serious losses upon the defendant in view of the advanced price of such castings which it would have now to obtain in the open market. These alleged damages the defendant set up by way of recoupment. The case went to trial, and the chancellor, treating the continued failure on the part of the defendant company to pay as a breach going to the whole contract, released the complainant company from all obligation to make future deliveries, and gave it a decree for the full value of the castings covered by its account with interest, less a small sum allowed the defendant company by way of recoupment. Upon reference of the cause to the Court of Chancery Appeals, this decree was affirmed.

That court finds as facts that the complainant company substantially complied with the obligations imposed upon it by the contract, and that only a short time before the complainant company notified it of a purpose to rescind because of the long failure to pay for castings delivered the defendant company expressed to the complainant entire satisfaction with the manner in which it had performed its part of the contract. Under this finding the only question really open is, did complainant have a right to rescind, or rather, to decline to go on with, the contract, upon the mere failure of the defendant to make payment for castings delivered as provided therein?

The contract in question, it will be observed, covers a period of three years, to be executed, however, in installments; that is, the castings were to be made and delivered by the complainant in lots as ordered or required by the defendant, and the defendant was to pay for each delivery in the mode set out in the opening paragraph of this opinion.

The rights of the respective parties under such a contract had been made a subject of much discussion, which resulted in discordant opinions in England. By some of the courts of that country the contract was regarded as severable or divisible, so that a failure to pay one or more installments due on delivery would not authorize the other party to rescind the contract, as for such failure he could obtain adequate compensation.

The English cases are grouped and analyzed by Mr. Benjamin in his work on Sales, and it would seem that some of the earlier of these cases were decided in view of this principle. Others, however, treated such a failure as evidentiary in character, leaving the question open for the court or jury whether by such failure the party guilty intended to abandon the contract and set the other party at large. This rule, after more or less fluctuation, seems to have been at last established so as to be beyond further controversy in the leading case of Mersey Steel & Iron Co. v. Nailor [1884] 9 App. Cas. 434.

In America it will be found that the courts are by no means in accord. However, in the now leading case in this country of Norrington v. Wright, 115 U.S. 188, 6 S.Ct. 12, 29 L.Ed. 366, the Supreme Court of the United States has announced the rule that, where a seller has provided in a contract with a buyer for a succession of deliveries, a failure upon the part of the seller to male one or more of the earlier deliveries, went to the whole contract, and relieved the buyer of all obligation to accept. In that case the facts were that Norrington sold to Wright & Son 5,000 tons of iron rails to be shipped from a European port or ports, at the rate of about 1,000 tons per month beginning with February, 1880, but the whole contract to be shipped before August 1, 1880. Norrington shipped 400 tons by one vessel in February, 885 tons by two vessels in March, 1,571 tons by five vessels in April, 850 tons by three vessels in May, 1,000 tons by two vessels in June, and 300 tons by one vessel in July, and notified the Wrights of each shipment. The Wrights received and paid for the February shipment upon its arrival in March, and in April gave directions as to what wharves the March shipment should be discharged, but on May 14th, having been for the first time informed of the amounts shipped in February, March, and April, gave the agent of Norrington written notice that they should decline to accept the shipments made in March and April, because none of them were in accordance with the contract. Thereafter tender of delivery of other cargoes shipped by Norrington to fill this contract was made by his agent to the Wrights, which they declined to accept upon the ground that the earlier shipments had not been made in accordance with the contract, and they thereupon announced their purpose to rescind the same. Suit was brought by the Norringtons, and they sought to recover for a breach of this contract, placing the right of recovery upon two grounds: "(1) That under the contract Norrington had six months in which to ship the 5,000 tons and any deficiency in the earlier months could be made up later, provided that the defendant would not be required to take more than 1,000 tons in any one month. (2) That, if this was not so, the contract was a divisible contract, and the remedy of the defendant for the default in any month was not by rescission of the whole contract, but only by deduction of the damages caused by the delays in shipment on the part of the plaintiff." To these...