Rubewa Prod. Co. v. Watson's Quality Turkey Prod., 3968.
| Decision Date | 29 May 1968 |
| Docket Number | No. 3969.,No. 3968.,3968.,3969. |
| Citation | 242 A.2d 609 |
| Parties | RUBEWA PRODUCTS CO., Inc., a corporation, Appellant, v. WATSON'S QUALITY TURKEY PRODUCTS, INC., a corporation, Appellee. WATSON'S QUALITY TURKEY PRODUCTS, INC., a corporation, Appellant, v. RUBEWA PRODUCTS CO., Inc., a corporation, Appellee. |
| Court | D.C. Court of Appeals |
Malcolm W. Houston, Washington, D. C., for appellant in No. 3968 and for appellee in No. 3969.
Maxwell A. Howell, Washington, D. C., for appellee in No. 3968 and for appellant in No. 3969.
Before HOOD, Chief Judge, and MYERS and KELLY, Associate Judges.
Rubewa Products Co., Inc., an international broker in poultry products, sued Watson's Quality Turkey Products, Inc., a poultry producer, for breach of a contract to sell and deliver unseasoned turkey hindquarters, claiming damages in the sum of $3,558.33. The complaint alleged that Watson's delivered to Rubewa poultry which was seasoned, not fully prepared for cooking, rancid and discolored, all in violation of the terms of the contract. At the same time Rubewa attached before judgment certain credits and property of Watson's in the hands of several customers in the District of Columbia.
Watson's entered its appearance, denied the specific allegations of the complaint, and counterclaimed for damages to its business reputation resulting from an alleged breach by Rubewa of the compulsory arbitration provision of the contract by bringing suit and filing the attachments before judgment. Rubewa filed an "Answer to Counterclaim", realleging the matters set forth in the original complaint as well as asserting that some of the cartons containing the poultry were mismarked. Rubewa also pleaded a counterclaim to Watson's counterclaim, seeking damages in the sum of $50,000 for loss of business resulting from the original breach of contract, to which Watson's replied with a general denial and a plea of lack of jurisdiction.
Rubewa, a District of Columbia corporation, is a broker in the business of buying poultry products from United States producers for resale to European buyers, making a small margin of profit on the difference between what it pays the domestic sellers and what it receives from the foreign buyers. Watson's, a New Jersey corporation, produces and sells poultry products. In October of 1963, Rubewa obtained an order from Ferdinand L. Friedrich Company of Hamburg, Germany, for approximately 30,000 pounds of unseasoned turkey hindquarters, to be supplied in cartons marked "FLF-HBG" on the short side of the cartons, for a net price of $8,955.28, after payment of freight, dockage and insurance charges. Rubewa then entered into a contract with Watson's to purchase approximately 30,000 pounds of unseasoned, fresh frozen turkey hindquarters for the price of $8,455.06, providing a profit to Rubewa of $500.22.1 It was specified in the contract that Watson's was to deliver the hindquarters to the shipping line designated by Rubewa at Philadelphia, Pa.
The hindquarters were delivered to Philadelphia and shipped to Germany. After the goods arrived in Hamburg, Rubewa was advised that the cartons were mismarked, the designated marks being displayed alongside of the name of a competitor of the Friedrich Company in Hamburg, and further, that the cartons bore the legend that the hindquarters were seasoned with salt, pepper, glutamate and herbs. Upon inspection by the Controll Co., a surveillance company hired by Rubewa, it was reported that the cartons were mismarked; that the hindquarters were seasoned at least to the extent of being salted, and that they were sporadically and partially rancid. Because of the "marks", the seasoning and the rancidity, Friedrich refused to accept the shipment of poultry.
Watson's was notified of Friedrich's refusal to accept the shipment and of its demand of Rubewa to repay the purchase price. A copy of the Controll Co. report was sent to Watson's. After a series of negotiations, during which Watson's offered to take the shipment back but refused to pay the return freight, the poultry was eventually sold in Germany at a claimed loss of $3,183.37. Rubewa's suit is for this sum plus additional costs of $374.96.
The trial court found that some of the turkey was to some extent rancid at the time it was inspected in Hamburg, but that no conclusion could be reached as to when it became rancid, or as to what caused the rancidity. It found that Watson's had exercised reasonable care and had used all customary techniques developed by the trade to protect the wholesomeness of the shipment up to the time of the delivery to the carrier, and concluded that Watson's could not be held liable for any spoilage of the turkey. The court also found that the markings on the cartons were material to their value at delivery and that some of the cartons were not marked as required by the contract or in accordance with the codes used by and known to those familar in this trade. It further found that some of the shipment was composed of and was marked as seasoned turkey, which had a market value in Germany at the time somewhat less than unseasoned turkey. The court concluded that these deficiencies in the shipment were readily apparent at the time of delivery at the dock in Philadelphia to the carrier of Rubewa; that in the exercise of reasonable prudence Rubewa should have inspected the shipment and either rejected it or reconciled the deficiency at that time, and that Watson's could not be assessed liability for costs that were incurred or that accrued thereafter. Damages were assessed on the basis of the difference between the value of the shipment as contracted for at dockside and as actually delivered at dockside. They were found to be $600.
In these cross-appeals from the judgment of the trial court appellant and cross-appellee Rubewa asserts error in the dismissal of its counterclaim to a counterclaim and in the amount of damages awarded. Appellee and cross-appellant Watson's claims it was error for the court to find for Rubewa on its original claim and on Watson's counterclaim; to admit certain interrogatories into evidence, and to allow interest to run on the judgment.
The trial judge was correct in dismissing Rubewa's counterclaim to a counterclaim. Such a pleading is permissible in a proper case,2 but here Rubewa merely pleaded in its counterclaim an additional element of damages arising out of the same breach of contract alleged in the original complaint. The counterclaim was not responsive to Watson's counterclaim for breach of the arbitration clause of the contract, nor did it set up a claim against Watson's which was separate and distinct from the original alleged breach of contract. In effect, Rubewa attempted to split its cause of action and to recover damages for breach of contract in excess of the jurisdiction of this court.3 We have said previously that this cannot be done, Le John Mfg. Co. v. Webb, D.C.Mun.App., 91 A.2d 332 (1952); Astor Pictures Corp. v. Shull, D.C.Mun.App., 64 A.2d 160 (1949), and for this reason hold that the counterclaim to the counterclaim was properly dismissed. The denial of Rubewa's motion to amend the complaint to incorporate the allegations of its counterclaim, made at the close of all of the evidence, was within the sound discretion of the court and we find no abuse of that discretion.4
On Watson's counterclaim for breach of the agreement to arbitrate5 the testimony was that the food business is highly competitive and especially vulnerable to charges of breach of contract for rancidness. Disputes are therefore normally resolved by arbitration in order to avoid the publicity of law suits, and if Rubewa had followed the contract procedure, most of the unfavorable publicity in the industry which followed the filing of this suit and the attachments before judgment, as well as the expense and inconvenience of trial, including attorney's fees, would have been avoided. At this point the court sustained an objection to further interrogation on the issue of damages for the stated reasons that attorney's fees could not be awarded to the prevailing party in this action and that that portion of the counterclaim which sounded in tort was premature because no claim existed for wrongful attachment until Watson's prevailed at trial. Watson's counsel insisted that the counterclaim was an action in contract, not one in tort, and that attorney's fees were sought as an expense resulting from Rubewa's breach of the arbitration clause of the contract, not as court costs. Watson's was nevertheless precluded from presenting any evidence of damage on the counterclaim and a trial finding for Rubewa was made thereon at the conclusion of Watson's case.
While the counterclaim is somewhat ambiguous, we accept Watson's disclaimer that it spelled out an action in tort.6 Conceding therefore that Watson's alleged a breach of contract, the only testimony on this issue was that Rubewa failed to seek arbitration before filing suit. It does not follow, however, that the court erred in precluding Watson's from presenting evidence of damage to its business reputation or of the amount of attorney's fees occasioned by this suit. Watson's did not seek a statutory remedy by invoking the Federal Arbitration Act, 9 U.S.C. § 1 et seq.,7 to enforce arbitration, and by answering the complaint on the merits and counterclaiming for damages, acts inconsistent with the right to arbitrate, waived enforcement of arbitration. Cornell & Company, Inc. v. Barber & Ross Company, 123 U.S.App.D.C. 378, 379, 360 F.2d 512 (1966). Cf. McKeeby v. Arthur, 7 N.J. 174, 81 A.2d 1 (1951). On the contrary, Watson's position was that the damage was done when the suit and the attachments were filed, so that its only remedy was to seek damages for breach of the agreement to arbitrate.
At common law the breach of an executory agreement to arbitrate will support an action for damages, ...
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