Taber Lumber Co. v. O'Neal

Decision Date14 March 1908
Docket Number2,599.
Citation160 F. 596
PartiesTABER LUMBER CO. v. O'NEAL et al.
CourtU.S. Court of Appeals — Eighth Circuit

W. D Bailey (Washburn and Mitchell, on the brief), for appellant.

J. N Searles, for appellees.

Before SANBORN, HOOK, and ADAMS, Circuit Judges.

ADAMS Circuit Judge.

This was a suit in equity brought by Eugene O'Neal and James O'Neal, constituting the firm of O'Neal Bros. against the Taber Lumber Company to reform a written contract and recover damages resulting from an alleged breach of it. The reformation prayed for concerned two provisions which, it is claimed, did not express the true intent of the parties. The desired reformation was allowed as to one provision and denied as to the other. As no error is assigned to that action of the court no further reference need be made to it and the contract as reformed will hereafter alone be considered.

It was composed of a written proposition made by complainants and accepted by defendant, and is as follows:

'Stillwater, Minn., Nov. 1, 1902.
'We hereby agree to log all timber belonging to the Taber Lumber Company in township 61 North, of range 16 West; township 61 North, of range 17 West; township 61 North, of range 18 West; township 60 North, of range 17 West; township 60 North, of range 18 West; township 59 North, of range 17 West; township 59 North, of range 18 West-- all in St. Louis county, Minnesota, excepting sections 1 and 11 in township 59 North, of range 17 West, and sections 23, 25, and 26 in township 59 North, of range 17 West, and except the western half of township 60 North, of range 18 West, unless railroad spur is built to Sand Lake. Timber to be loaded on cars at rate of 20 cars per day beginning January 1st each year until not less than 10,000,000, nor more than 12,000,000 feet are shipped, shipments to be continuous until full amount is shipped in each year. In case of our failure to have 40 cars loaded each alternate day, we agree to pay the Taber Lumber Co. whatever penalty they are forced to pay railroad company, unless such failure is caused by D.V. & R.L. Ry. Co.'s failure to deliver us cars, and in case of the railroad company's failure to furnish us the forty cars each alternate day, the Taber Lumber Co. agrees to pay us the same penalty. The price for the entire tract, as above, to be $5.50 per thousand delivered on cars, we to bear all expenses, both for material and construction in building any spurs which we may decide to use in getting out logs. The Taber Lumber Co. to furnish 2 1/2 miles of steel rails with the necessary angle bars for the same. The Taber Lumber Co. to advance us from $10,000 to $12,000 between November 1st, 1902, and January 1, 1903, this amount to be deducted from last payment made for logging season of 1902-3, and we to pay 6 per cent. interest. Terms of payment: Settlement to be made in cash on the 15th of each month for logs loaded on cars during preceding month. Payments to be based on surveyor general's scale as logs are loaded on cars, cost of scaling to be divided equally between Taber Lumber Co. and ourselves. All logs to be cut according to directions of Taber Lumber Co. and under their supervision, and we will board, free of charge, any men which the Taber Lumber Co. may place in camp for the purpose of looking after their interests and supervising cutting.

'O'Neal Bros. 'Accepted. Taber Lumber Co., by E. Carroll Taber.'

Complainants claimed that they performed their part of the contract by cutting the logs and delivering them aboard the cars as required with the exception of such as grew on the western half of township 60, range 18, last referred to in the contract, and that there became due therefor the sum of $49,149.74, of which only $48,095.24 had been paid, leaving a balance of $1,054.50 still due. Complainants also claimed that they were entitled under the terms of the contract to cut the logs from the western half of township 60, range 18, and to receive as compensation therefor the price fixed by the contract of $5.50 per thousand feet; that defendant did not permit them so to do, and they were thereby unlawfully deprived of the profit which they might have made by doing it, claimed by them to be $17,500. Defendant denied owing the claim of $1,054.50 because of demurrage which it was required to pay the railway company for cars detained, which it claimed the right to charge and had charged to complainants to balance their account.

With respect to the second claim made by complainants, defendant's contention is that, because no railroad spur was built to Sand Lake within the meaning of the exception found in the first part of the contract, complainants had no right to cut the logs from the western half of township 60, range 18, and if they had such a right there was no competent proof of damages sustained by them in not being permitted to exercise the right.

Defendant also claimed that an account was stated between it and complainants at the end of each logging year and that complainants by failing to object thereto are estopped from making the claims now asserted by them. Defendant in its cross-bill claimed special damages in the sum of $10,000 from complainants for loss of profits alleged to have been occasioned by complainants' failure to cut and deliver 10,000,000 feet of lumber as required by the contract during the first logging year of 1902 and 1903. The Circuit Court allowed complainants $921.50 on their first claim and $5,250 on their second claim, making a total of $6,171.50, and allowed nothing to defendant on its cross-bill. The appeal brings up for review these rulings of the court.

As complainants have not appealed from the allowance to them of $921.50 instead of $1,054.50 on their first claim, the controversy now concerns the former sum only. Was that amount due complainants as a balance for logs actually shipped? It was, unless defendant was justified in charging complainants with demurrage paid by it to the railway company for cars unnecessarily detained by them during the five days of April 6, 7, 8, 9, and 10, 1903. The learned trial judge disposed of this item by saying:

'The facts seem to be that complainants requested a cessation of cars during these five days in order to enable them to change the spur tracks and that this was assented to by defendant. It seems to me, therefore, that defendant ought not to withhold any compensation that was due complainants on account of that demurrage and therefore, upon that ground alone, the complainants are entitled to recover what was charged against them and withheld for demurrage during those five days, which amounted to $921.50.'

There is some conflict in the proof as to whether defendant assented to complainants' cessation of shipment for the days in question, but there is abundant evidence from which that fact could fairly be found. In such case the finding of the trial court is presumptively correct and should be followed unless an obvious error has occurred in the application of law or a serious mistake has been made in the consideration of the proof. Mastin v. Noble (C.C.A.) 157 F. 506, and cases cited.

Whether the contract of November 1, 1902, gave complainants a right to refrain from shipping for five or any other number of days or not, it is clear that if complainants afterwards, in any manner, secured the consent of defendant to refrain from shipping during those days and acted upon that consent, defendant is estopped from penalizing them for doing so. We see no reason for disturbing the conclusion reached on this item by the Circuit Court.

Whether the next item of $5,250 was properly allowed to complainants depends upon the true meaning of the contract of November 1, 1902. By clear language complainants were first given the right to clear the whole of township 60, range 18, together with other townships and ranges; and by equally clear language the western half of township 60 was excepted from the operation of the contract. Complainants acquired no right to clear that tract, and defendant incurred no obligation to complainants therefor 'unless railroad spur is built to Sand Lake.'

In other words, by an exception to the exception, the western half of township 60 was brought within the operation of the contract, provided, and upon the condition, that a railroad spur should be built to Sand Lake. The burden rested upon complainants to show that this spur had been built. Have they done so? In answering this question regard should be had to the facts and circumstances surrounding the parties at the time the contract was made.

It appears that the Duluth, Virginia & Rainy Lake Railway Company had constructed and was operating a line of railway which we will hereafter call the Rainy Lake Railway, running in a northerly and southerly direction, substantially midway through the lands first described in the contract and reasonably near to all of them. This the pleadings show, and there is abundant evidence that both parties had reference to this railway in the various provisions of their contract. The timber last described, located on the western half of township 60 was some four or five miles distant from the main line just referred to, and speaking generally, it was located in close proximity to Sand Lake. Complainants by the contract in question undertook to deliver all logs cut by them upon cars standing on the main line or upon spurs connecting with the main line, and they undertook to build such spurs as they should find to be necessary or advisable in the prosecution of their work. Of the necessity or advisability of doing that, however, complainants were left to...

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