Spang v. Rainey

• Decision Date: 23 February 1897
• Citation: 79 F. 250
• Parties: SPANG v. RAINEY.
• Court: U.S. Court of Appeals — Second Circuit

79 F. 250

SPANG v. RAINEY.

United States Court of Appeals, Second Circuit.

February 23, 1897

John E Parsons, for plaintiff in error.

Wm. B Hornblower, for defendant in error.

Before LACOMBE and SHIPMAN, Circuit Judges.

LACOMBE Circuit Judge.

The defendant was one of several partners who owned and operated a furnace under the name of the Isabella Furnace Company, and the action was brought to recover the price of coke delivered by the plaintiff under the following contract:

'Memorandum of agreement made this third day of May, eighteen hundred ninety-four, and to continue until the third day of February, eighteen hundred ninety-five, by and between W J. Rainey, of Cleveland, Ohio, and Isabella Furnace Co., of Pittsburgh, Penna.: The said W. J. Rainey bargains and agrees to supply the said Isabella Furnace Co. coke to the extent of about fifteen car loads daily, at the rate of ninety (90) cents per ton of 2,000 pounds, railroad weight, at the mines in the Connellsville region,-- good, merchantable coke, equal to the best made by the said W. J. Rainey. Said price to continue until there may be a general advance in the market price of coke. Then and in that event the price shall be the lowest rate at which coke is sold to the larger and better consumers of coke in the market. Settlements to be made in cash, say the 25th of the month following previous month's delivery. This contract to be held in abeyance in the event of strikes, or the inability of W. J. Rainey to produce coke.

'W. J. Rainey, per W. T. Rainey. 'Isabella Furnace Co.' There was no dispute as to the quantity delivered under this contract. The jury found the price payable therefor to be 90 cents up to May 10, 1894, $2.50 from that date to and including June 30, 1894, and $1.50 from that date to and including August 4, 1894, the date of the last delivery. The matters in dispute upon the proofs were whether there had been a 'general advance in the market price of coke,' within the meaning of the contract, and, if so, what, at the time of the several deliveries, was the 'lowest rate at which coke was sold to the larger and better consumers. ' With the weight of the evidence bearing upon these points this court has no concern. That is a matter for the consideration of the trial judge upon motion for a new trial, and his consideration of the trial judge upon motion for a new trial, and his disposition of such motion is not reviewable by writ of error. The only questions to be determined here are whether there was any evidence to go to the jury sustaining the plaintiff's contention; whether the case was submitted to the jury with correct instructions; and whether there was any harmful error in the admission or rejection of evidence.

It is assigned as error that the court refused to instruct the jury that by the expression, 'a general advance in the market price of coke,' as used in the contract, is meant a general advance over what was the market price of coke at the time the contract was made, on May 3, 1894, and not simply over the 90 cents per ton named in the contract. We see no reason for giving any such forced and awkward construction to the instrument. The contract evidently provides for a price initially of 90 cents, but which is to advance or recede (not in any event below 90 cents) so as to conform to the general market price, i.e. to the lowest market rate paid by the larger and better consumers. There was abundant evidence that, subsequently to the making of the contract, coke was bought by the larger and better consumers at prices above 90 cents, and as high as those found by the jury. To understand the theory upon which defendant contends that these purchases should not have been considered by the jury, it is necessary briefly to state some peculiarities of the business which were disclosed by the testimony. The great bulk of the output of coke from the region in question was supplied by three concerns,-- the H. C. Frick Company, the McClure Company, and the plaintiff. There were some smaller concerns which produced it in limited quantities. The coke is bought by those who operate blast furnaces, and is absolutely necessary to the running of such furnaces. Since the assurance of a steady supply is important to the furnace men, they undertake to secure it in most cases by making contracts with the coke producers for deliveries of specified quantities during some specified time,--either a year or some fraction of a year. The price is definitely fixed in these contracts at some uniform rate, which presumably is what the seller thinks he can safely sell at, averaging any expected differences in the cost of production during the period. These are spoken of in the record as 'time sales' or 'time contracts.' If, however, for any reason, a user of coke needs more than he can obtain under his time contracts either because he is using more than he has provided for, or because he is not receiving all he bargained for under such contracts, he goes into the market and buys what he needs for immediate delivery, or for delivery during some short future period. How much he will thus buy depends upon his needs,-- that is, upon the amount of shortage he has to make up,-- and no doubt, to some extent, upon the price he may have to pay for it. These sales are referred to in the record as 'spot sales' or 'emergency sales.' The time contracts contain a strike clause similar to that which is found in the contract in suit, so that purchasers of coke can never be sure that they will receive all they have provided for under their time contracts at the price fixed therein. They are liable at any time, in the event of a strike, to be compelled to pick up their coke where they can, and at prices regulated by the supply and demand. At the time the contract in suit was made, a strike was on, and its effect began to be felt immediately. During the month of May the H. C. Frick Company was able to produce only 2,557 car loads of coke, as against an ordinary running capacity of 19,000 to 22,000 car loads. Its condition improved subsequently, but even in the month of July it was able to produce barely 50 per cent. if its regular output. The consequence was that although the blast furnaces which it had contracted to supply were short of coke, were demanding coke, and in some cases had to stop business because they did not have coke, the Frick Company was obliged to avail of the strike clause in its existing contracts, not being able to carry them out Except as it was protected by such clause. It disposed of the coke it did produce by distributing it...