T.B. Walker Mfg. Co. v. Swift & Co.

• Decision Date: 07 October 1912
• Docket Number: 2,287.
• Parties: T. B. WALKER MFG. CO. v. SWIFT & CO.
• Court: U.S. Court of Appeals — Fifth Circuit

200 F. 529

T. B. WALKER MFG. CO. v. SWIFT & CO.

No. 2,287.

United States Court of Appeals, Fifth Circuit.

October 7, 1912

Rehearing Denied November 22, 1912.

T. W Gregory, of Austin, Tex. (Hart & Patterson and Gregory, Batts & Brooks, all of Austin, Tex., on the brief), for plaintiff in error.

James H. Robertson, of Austin, Tex. (J. B. Robertson, of Austin Tex., on the brief), for defendant in error.

Before PARDEE and SHELBY, Circuit Judges.

SHELBY Circuit Judge.

In 1909 the parties to this suit, who, for purposes of jurisdiction are citizens of different states, made the following contract of sale:

'This agreement witnesseth: That Swift & Company, Austin, Texas, agree to sell and deliver, and T. B. Walker Manufacturing Company, Austin, Texas, agree to buy and receive, 175,000 pounds to 225,000 pounds beef trimmings, fresh or frozen, seller's option. If fresh, packed in barrels; if frozen, packed in 100-pound boxes. We take care of buyer's needs this year.

'Delivery-- By seller's team at buyer's place of business as wanted by the buyer during the year 1909, in about equal quantities monthly.

'Payment-- As may from time to time be designated by seller's credit department.

'Price-- 3 1/2¢ per pound, C.A.F., Austin.

'This agreement subject to:

'1. Fires, strikes, floods and to confirmation by Swift & Company, Chicago, Illinois.

'2. In case buyer defaults in payment, become subject to bankruptcy laws, or credit impaired, seller may refuse further deliveries, except against each.

'Confirmed in Chicago, Illinois, . . . 1909.

'Swift & Company, 'By W. W. Farmer, Cashier.

'T. B. Walker Manufacturing Co.

'By Del Walker, Buyer,

'JnP & May.'

The clause, 'We take care of buyer's needs this year,' was added to the contract at the request of the buyer, to increase the maximum quantity it was entitled to order.

The action is brought by the buyer, alleging that the seller failed and refused to deliver the commodity sold in quantities as required by the contract. The rulings of the trial court to which exceptions are reserved involve two questions: (a) Whether or not the addition to the contract is valid; and (b) if valid, what is the proper construction and meaning of the added clause?

1. When there are negotiations in reference to a sale, they must be such as will bind both parties, or neither will be bound. Unless both are so bound that either could maintain an action against the other for a breach, neither will be bound. It follows that, if a seller agrees to deliver such quantities of any commodity as a buyer may choose to order, but the buyer does not agree to order any quantity of such commodity, the contract would be wanting in mutuality and void. The buyer not being bound, the seller would be free to disregard the agreement. To hold otherwise would enable the buyer to give orders and take the commodity if prices fall, and to give no orders and refuse to take it if prices should rise. It is axiomatic that such a contract would be wanting in mutuality and void. Bishop on Contracts (2d Ed.) Sec. 78.

2. But where the buyer has an established business, it is competent for the seller to contract with him to furnish him with such supplies as may be needed by him during a certain period; for in such case both parties would be bound, the one to furnish and the other to take what was needed. Klipstein & Co. v. Allen (C.C.) 123 F. 992. Business necessities require contracts of this class, though more or less indefinite, to be upheld. Thus a hotel keeper could purchase his necessary supply of ice, a foundry all the coal needed for the season, or a furnace company its requirements of iron. Crane v. C. Crane & Co., 105 F. 869, 45 C.C.A. 96, and cases there cited. In such cases it can be ascertained with some degree of certainty the quantity needed, and the intention of the parties, it is presumed, was to contract in reference to such quantity. The business being established, the purchase is an incident to it, and the purchase would be reasonably necessary, whether the prices of the article rose or fell. Such contracts, are, therefore, held valid.

The contract in question here is certainly valid to the extent that Swift & Co. agrees to sell, and the Walker Manufacturing Company agrees to buy, '175,000 pounds to 225,000 pounds of beef trimmings, fresh or frozen. ' To the extent of the larger named number of pounds-- and more besides-- the contract has been performed. The controversy arises on the agreement by the seller...