Tennessee Fertilizer Co. v. International Agr. Corp.

• Decision Date: 15 July 1922
• Parties: TENNESSEE FERTILIZER CO. ET AL. v. INTERNATIONAL AGR. CORPORATION.
• Court: Tennessee Supreme Court

243 S.W. 81

146 Tenn. 451

TENNESSEE FERTILIZER CO. ET AL. v. INTERNATIONAL AGR. CORPORATION.

Supreme Court of Tennessee.

July 15, 1922

Appeal from Chancery Court, Davidson County; James B. Newman Chancellor.

Action by the Tennessee Fertilizer Company and others against the International Agricultural Corporation. Judgment for plaintiffs, and both parties appeal. Affirmed.

Pitts & McConnico, of Nashville, and Chas. P. Hatcher, of Columbia for appellants.

John J Vertrees and Wm. O. Vertrees, both of Nashville, and Jos. M. Hartfield, of New York City, for appellee.

BACHMAN J.

This suit was instituted by the Tennessee Fertilizer Company to recover damages of the International Agricultural Corporation for the breach of a contract for the sale and delivery of sulphuric acid. The chancellor decreed in favor of the complainants, holding that the cancellation by the seller was unwarranted, and the buyer entitled to recover the difference between the contract price and market price at delivery dates, the amount of damages being fixed through reference in the sum of $479,788.11. Both parties have appealed and assigned errors to the decree of the chancellor.

The facts are as follows: Controlling by contracts the disposition of all sulphuric acid produced by the Tennessee and Ducktown Copper Companies, located respectively at Copperhill and Isabella, Tenn., the defendant, International Agricultural Corporation, as seller, entered into a contract, dated May 20, 1912, with the complainant, Tennessee Fertilizer Company, as buyer, whereby it agreed to deliver to the buyer, beginning October 1, 1912, 50,400 tons of 60 degree Baume sulphuric acid in installments of 700 tons per month, f. o. b. Copperhill in tank cars furnished by the seller. The price fixed was $5.75 per ton for 25,200 tons to be delivered during the first 36 months and $6 per ton during the last 36 months, payment to be made on the 10th of each month for the preceding calendar month's deliveries. The contract is typographically divided under separate headings, which stipulate the quantity, price, terms, settlements, and weights, and relievable contingencies agreed upon; under the latter clause it is provided, among other contingencies, that in the event of accidents to machinery whereby the parties might be prevented from carrying out the provisions of the contract the same was to be suspended for such time as was necessary to make repairs. The contract contains no provision authorizing the seller upon notice to the buyer to dispose of or waste, for the buyer's account, delinquent acid accumulated in the hands of the seller in excess of certain tonnages, as was provided for in the contract between the producer, Tennessee Copper Company and its vendee, the International Agricultural Corporation, dated January 18, 1911.

On June 14, 1912, J. H. Carpenter, president of the Tennessee Fertilizer Company, contracted to sell H. L. Todd and associates, afterwards organized as the Carolina Phosphate Company, 700 tons per month of 50 degree sulphuric acid, for a period of 72 months, beginning October 1, 1912. This contract by its terms does not refer to the contract between complainant and defendant, dated May 20, 1912, nor does it appear that the defendant was apprised thereof until August 22, 1914, when complainant wrote, stating that it had sold the acid to the Carolina Phosphate Company, and insisting upon shipments being made to it. Performance of the contract was begun in October, 1912, the buyer receiving, upon shipping instructions given the seller, acid tonnage largely in excess of the contract provision of 700 tons, which was distributed by the buyer between its own plants and others to whom it had sold the same. Thereafter shipments in varying amounts were made by the seller upon instructions from the buyer, suspensions being requested and complied with without objection, the correspondence disclosing no effort on the part of either party to enforce strict compliance with the contract terms as to the installments to be taken, until August 2, 1913, when the seller notified the buyer that it was delinquent in taking acid and requested shipping instructions.

On August 11, 1913, the seller wrote, calling attention to the delinquent acid and stating that it might be necessary to waste the same for the buyer's account unless ordered out promptly, to which the buyer replied that it did not recognize any right in the seller to waste acid for its account. On August 15 and 18, 1913, the seller again wrote the buyer with reference to delinquencies and in the latter letter again reiterated its position as to the probability of wastage on buyer's account. On September 8, 1913, the following letter was written:

"Atlanta, Ga., September 8, 1913.

Tennessee Fertilizer Company, Nashville, Tenn.--Gentlemen: It has been our pleasure up to the present time to extend to you the utmost latitude in our dealings with you on sulphuric acid. Specific contract conditions have been largely, if not entirely, ignored, as it did not suit your convenience to follow them. It has been incumbent upon us, however, to stand in the gap and live rigidly up to the terms and conditions of our contract with the Tennessee Copper Company. The result is that we are able to no longer extend to you the courtesies of the past, and we must call upon you to give us definite shipping instructions for the overdue balance of sulphuric acid.

If you do not give these shipping instructions, the results will probably be that the Tennessee Copper Company, unable to store any larger amount of acid in their tanks, will deliberately waste this acid and render us bill for it. As the acid has been sold to you and has been held by us for you up to this time, and if it is now refused by you, we will be compelled to charge you with it, in the event of such wastage. If it were possible to sell this acid in the open market for your account, and lessen your loss by so doing, that would be our duty, but there appears to be no prospect of that.

We may be able to rent additional tank cars, have them loaded for you, and held on your side track by you, until you are able to receive the acid and release the cars. In that event, the loss to you would be only the rental of the cars and the demurrage paid on same.

Briefly, the situation demands heroic treatment, and we must ask you to consider this letter as formal and legal notification of what to expect. We greatly regret the necessity that compels us to write you.

Yours very truly, [Signed] W. F. Guthrie."

The receipt of this letter was acknowledged by the buyer's representative with the statement that the president had been abroad, but was en route to New York and would advise upon arrival. The buyer thereafter resumed the receipt of acid in irregular monthly amounts until June 23, 1914, when it was notified by the seller that on account of a shutdown for repairs at the plant of the Tennessee Copper Company, to last for a minimum of two weeks, delivery of acid would be suspended in accordance with the terms of the contract. Subsequent to the time designated as the duration of the shutdown at the producer's plant, the buyer directed the resumption of shipments at the rate of 700 tons per month, but was informed that production of acid had not reached normal quantity, and that only one or two cars per week could be allowed it; the buyer again insisted upon deliveries in accordance with the contract terms, and was advised by the seller that shipments would be increased as soon as normal production was restored.

On September 8, 1914, the buyer requested the suspension of shipments until further notice, which was agreed to by the seller. Under date of October 15, 1914, the seller wrote, requesting shipping orders on acid due as per contract, and each month thereafter wrote similar notices, tendering acid, in two of which notices the attention of the buyer was again directed to the danger that wastage might become necessary, in which event the seller would look to the buyer for reimbursement for any claim made upon it by the producer. No written response was made to these letters, but it is in evidence that in response to verbal requests made by the vice president of the seller the buyer's president, Mr. Carpenter, stated that the buyer was going to take the acid as fast as it could, and was going to take it all.

The following letter was sent to the buyer on June 4, 1915:

"Atlanta, Ga., June 4, 1915.

Tennessee Fertilizer Co., Nashville, Tenn.--Gentlemen: We hereby tender you sulphuric acid due you as per the terms of your contract. Kindly furnish us with shipping orders at once, and oblige. Yours very truly, [Signed] W. F. Guthrie."

Reply was made thereto as follows:

"New York, June 11, 1915.

Mr. F. F. Ward, Asst. Secy., International Agricultural Corporation, 165 Broadway, City--Dear Sir: Please resume shipments of sulphuric acid to the Carolina Phosphate Company, Greenville, S. C., at the rate of 700 tons per month.

Kindly acknowledge receipt of this, and oblige. Yours very truly, Tennessee Fertilizer Co., [Signed] J. H. Carpenter, President." Two or three days after the date of the above letter directing resumption of shipments, Mr. Carpenter and Mr. Fleming, presidents of the respective companies, had a conversation in the Vanderbilt Hotel in New York, wherein the former, insisting upon the delivery of acid, was informed by the latter that no further acid would be furnished by the seller, and thereafter, on June 17, 1915, the following letter was forwarded to the buyer:

"General Offices, 165 Broadway. Telephone Cortlandt 5806.

New York, June 17, 1915.

Tennessee Fertilizer Co., Mr. J. H. Carpenter, President, Nashville Tennessee--Dear Sir: On...