Russell Miller Milling Co. v. McLean

• Decision Date: 18 April 1925
• Docket Number: 5196.
• Parties: RUSSELL MILLER MILLING CO. v. McLEAN.
• Court: South Dakota Supreme Court

203 N.W. 498

48 S.D. 198

RUSSELL MILLER MILLING CO. v. McLEAN.

No. 5196.

Supreme Court of South Dakota

April 18, 1925

Appeal from Circuit Court, Davison County; Frank B. Smith, Judge.

Action by the Russell Miller Milling Company against B. L. McLean doing business under the name of the Mitchell Flour Company. From judgment for plaintiff notwithstanding verdict and from order denying new trial, defendant appeals. Judgment and order affirmed.

Dillon J., dissenting.

Spangler & Wire, of Mitchell, for appellant.

Miller & Mitchell, of Mitchell, for respondent.

SHERWOOD J.

This is an action brought on a contract for the sale of 400 barrels of flour. There was a verdict for plaintiff for $150, and later, on plaintiff's motion, judgment notwithstanding the verdict was entered for $280. From this judgment and from an order denying a new trial, defendant appeals.

On November 5, 1920, under this contract respondent sold appellant 400 barrels of flour at an agreed price of $11.36 per barrel, f. o. b. Minneapolis, to be delivered within 60 days from date of contract. By the terms of the contract it was agreed that if the buyer failed to file with the seller within 15 days prior to the expiration of the contract time of shipment, shipping instructions permitting the seller to ship within the remaining contract time of shipment, then the seller might cancel this contract, and the buyer should pay the seller an entry charge of $.25 per barrel on flour plus or minus the market price difference between the date of contract and date of cancellation, in the commodities covered by the contract. The time in which the flour was to be shipped expired January 4, 1921.

On December 17, 1920, defendant notified plaintiff he would give no shipping instructions because he did not think he could accept the flour. On December 20th plaintiff notified defendant if they did not receive the shipping instructions they would cancel the order January 4th, and would charge the defendant the difference in the market price between the flour as agreed in the contract and the price on the 4th of January, plus 25 cents per package. No answer being received to this, plaintiff canceled the contract and charged the defendant the difference in market price, which amounted to 70 cents a barrel, actual depreciation in the market amounting to $280 and 25 cents a barrel, entry charge amounting to $100, or a total of $380.

There is no question but what the 25 cents a barrel was a penalty and void under section 895, R. C. 1919; but this penalty was separable from the rest of the contract, was not included in plaintiff's judgment of $280, and does not render the contract void. Utley v. Dunning, 38 S.D. 447, 161 N.W. 813. The 70 cents a barrel was the difference in the price of the flour f. o. b. Minneapolis on January 4th, when the flour was to be delivered, and the price agreed to be paid in the contract and amounted to $280.

The jury found a verdict for $150 for plaintiff under a direction of the court to find the difference in the market value of the flour in Minneapolis between the agreed price of $11.36 a barrel, made November 5th, and the market price per barrel on January 4th. There was no contradiction in the evidence that the difference was 70 cents a barrel; therefore there was no basis for the jury's verdict of $150; they could have found no other sum than $280. The court was clearly right in granting the judgment for $280, notwithstanding the verdict. In fact, on the evidence, it should have directed a verdict on plaintiff's motion.

As we view this matter, there were two provisions of the contract under either of which the plaintiff might declare it canceled and recover damages: First. If the buyer shall fail to file with the seller, 15 days before the expiration of the contract time for shipment, shipping instructions, then the seller may cancel the contract and recover the difference in the market price of flour at time of cancellation and the amount agreed to be paid in the contract. Second. If the buyer refuses to accept any shipment that is made, then the seller may cancel the contract and recover such damages.

It seems clear to us that one of these options or rights to cancel the contract is as binding as the other. It is true that one of the defenses was that the territory of the buyer in which he might sell his flour had been restricted and he had written a letter saying he could not handle the flour if his territory was to be restricted by the buyer: nevertheless the buyer never rescinded the contract as provided by section 906, R. C. 1919, and this seems to be conceded by appellant's counsel in his statement on page 73, Abstract, in which he says:

"The defendant, for some time prior to said contract, had been handling the plaintiff's flour and had established a trade in several counties adjacent to Mitchell, aforesaid. After making said contract of purchase and prior to the time of delivery, the plaintiff informed the defendant that he would not be permitted to sell said flour in several of said counties in competition with other dealers, whereupon defendant informed the plaintiff that if his territory was so restricted he did not believe he could handle the flour purchased under said contract, Exhibit A.

However, the defendant never refused to accept said flour, and under said contract the plaintiff was authorized to ship said flour to Mitchell and draw on the First National Bank of Mitchell, S. D., for the price; but the plaintiff never shipped said flour to Mitchell and never delivered the same to defendant and the defendant has never received any part of said flour.

Instead of shipping said flour as it agreed to do, the plaintiff elected to declare said contract canceled under a fine print clause contained on the back thereof and brings this action to collect the penalties therein provided for."

It will be observed that defendant does not claim a rescission of the contract was ever made because plaintiff restricted his territory. He claims he wrote a letter about it, and then he seems to have abandoned any further effort to rescind.

What he does claim is that the flour was never shipped to Mitchell. The trouble with this contention is that the right to cancel the contract for failure to give the shipping directions is given in the same paragraph of the contract that the right to cancel it for failure to accept is given. They both have equal authority and by the printed abstract appear to have been printed in the same kind of type. And it is provided in the contract that the commodities or goods are sold "on the terms and conditions stated herein and printed on the back hereof, which terms and conditions are binding on both parties to the contract and cannot be modified except by written consent of both parties."

But all doubt on the question of defendant's rescission of the contract, or even attempted rescission, because of restricted territory, is set at rest by the defendant's specification of error 32, p. 96, in which defendant says:

"The defendant says there is further error upon the face of the record in that the evidence is insufficient to sustain the verdict in this, to wit:

A. There is no sufficient or competent evidence that the defendant ever, in any manner, rescinded the contract in suit or refused to accept the flour or to carry out said contract on his part."

And in the argument on this specification of error the defendant says:

"Under assignment 32 we call the attention of the court to the fact that there is no

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