Texas Co. v. Pensacola Maritime Corporation

• Citation: 279 F. 19
• Decision Date: 10 March 1922
• Docket Number: 3798.
• Parties: TEXAS CO. v. PENSACOLA MARITIME CORPORATION.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

279 F. 19

TEXAS CO. v. PENSACOLA MARITIME CORPORATION.

No. 3798.

United States Court of Appeals, Fifth Circuit.

March 10, 1922

Harry T. Klein, of New York City, E. C. Maxwell, of Pensacola Fla., and Palmer Pillans, of Mobile, Ala., for plaintiff in error.

Francis B. Carter, of Pensacola, Fla., for defendant in error.

William H. Watson and S. Pasco, Jr., both of Pensacola, Fla., amici curiae.

Before WALKER, BRYAN, and KING, Circuit Judges.

KING Circuit Judge.

The defendant, the Texas Company, entered into a contract with the plaintiff, Pensacola Maritime Corporation, for the sale to it of-- 'all of the bunker oil sold by the purchaser (plaintiff) to vessels in the port of Pensacola, Florida, from August 1 1919, to September 30, 1920. Seller is not obligated to deliver more than 20,000 barrels in any calendar month except as follows: (1) The purchaser shall have the right to take an additional 15,000 barrels in any month or a total of 35,000 barrels on 10 days' written notice to the seller. (2) The purchaser shall have the right to take a further additional 15,000 barrels in any month or a total of 50,000 barrels on 30 days' written notice. But in case the purchaser gives notice of such additional requirements purchaser shall be obligated to take the oil called for in such notice at the time indicated. Prices are f.o.b. at purchaser's vessels alongside seller's dock at Pensacola, Florida; seller to pump aboard ship; seller's responsibility ends at ship's rails. * * * Terms: Cash on completion of delivery. Place of payment: Seller's Pensacola office.'

The contract made the printed conditions on the reverse side thereof, so far as applicable, parts of the contract. The portions thereof pertinent to this case are the following:

'By this memorandum the seller sells and agrees to deliver and the purchaser purchases and agrees to pay for the goods mentioned within. Unless otherwise stated in this memorandum, delivery shall be deemed complete when goods properly consigned are placed free on board boats, and no stipulation, agreement or understanding of the parties shall be valid or enforceable unless embodied in this memorandum or covered by these provisions. * * *

'Payments: * * * A failure to pay any amount when due may at the option of the seller terminate the contract as to further deliveries and no forbearance or course of dealing shall affect this right of the seller.'

No orders were given by the plaintiff for oil thereunder until March 30, 1920, when an order for one vessel was given. During April, 1920, orders for oil for six other vessels at Pensacola, Fla., were given by plaintiff and filled by defendant. On April 23d and May 1st, the plaintiff notified the defendant of additional requirements for oil for vessels at Pensacola to arrive during May. On May 3, 1920, about 5 p.m., defendant's agent delivered to plaintiff a notice, dated May 2d, stating that defendant thereby canceled said contract as of 6 o'clock a.m., May 3d. The cancellation was stated to be authorized by the terms and conditions of the contract, particularly the paragraph entitled 'Payments.'

No further deliveries of oil were made after said time. At the time said notice was given, the plaintiff had paid for all oil previously delivered, no notice of any purpose to insist on payment being made at the time provided by contract, or of a purpose to cancel the contract as to future deliveries, was given except the notice delivered on May 3d. Plaintiff immediately notified defendant that it denied having breached the contract, and demanded a specification of the breaches claimed by defendant; also that it had sold all oil provided for by the contract, 50,000 barrels per month, and would take and pay for the same. No reply to this letter appears in the record.

Suit was commenced on June 7, 1920, for breach of said contract. In an amendment to its declaration, plaintiff averred that, in addition to the consideration stated in said contract, the plaintiff, at and before the making thereof, promised defendant that it would endeavor to sell to such vessels the fuel oil mentioned in said contract, and that to accomplish this end plaintiff's officers and agents would solicit orders, and it would send a representative to Europe to endeavor to sell such oil, and to establish agencies for the sale thereof. The damages claimed were the difference between the contract price and the market price of the oil demanded by plaintiff, to wit, 35,000 barrels for May, and 50,000 barrels for each of the months, June to September, both inclusive, or 235,000 barrels, at the times for delivery. The market price for each month was stipulated, subject to defendant's right to object to its introduction in evidence.

No demurrer or exception was filed by defendant to the original or amended declaration. The defendant pleaded:

(1) That at the time of entering into said contract plaintiff was not and never had been engaged in the business of dealing in bunker oil.

(2) That plaintiff was not and never had been so engaged at said time, and made no sales for more than seven months after July, 1919.

(3) After repeating the averments of the last plea, it pleaded that any sales then made were at a time when the price of bunker oil had advanced much beyond that named in said contract.

By amendment to each of these pleas, it denied that it entered into the contract set up in the amended declaration.

(4) It further pleaded that, by the terms of the contract, payments were to be made on completion of delivery at defendant's Pensacola office, that a failure to pay any amount when due might at the option of the seller terminate the contract as to further deliveries, and that no forbearance or course of dealing should affect this right of the defendant; that prior to the giving of the notice of May 3d, stated in said declaration, and to the refusal of the defendant to deliver oil, plaintiff had failed to pay, when due, the amount due the defendant for oil previously ordered by plaintiff and delivered.

The plaintiff joined issue on all of said pleas, and in addition filed a special replication to said fourth plea, averring that all oil had been paid for before the giving of the notice of May 3d, and that defendant had never given any notice that it insisted on payments being made at the time provided by said contract, nor that it would terminate the contract as to future deliveries for failure to make any payment promptly when due. A demurrer to this replication was made and overruled, and issue joined thereon. Subsequently the defendant admitted the truth of the statements therein made.

The court charged the jury that, if they found for the plaintiff, they must find the amount of difference between the contract price and the market price at the several times fixed for delivery on 235,000 barrels of oil, to be delivered 35,000 barrels in May, 1920, and 50,000 barrels in each of the months, June to September, both inclusive, with interest at 8 per cent. from the 1st of each succeeding month, $559,167.89. The jury returned a verdict for the plaintiff for said amount.

The questions raised in this case, and insisted upon in the argument, were:

(1) That the contract was void for want of consideration, plaintiff not having, at the time it was made or before said time, ever engaged in the business of selling bunker oil, and not binding itself to take any particular quantity of oil.

(2) That the effort to show a further consideration for the contract in an undertaking to use the force of the plaintiff in this country and its agent in Europe to promote the sale of defendant's oils was an attempt to add to a written contract an additional clause not claimed to have been subsequently made.

(3) That the evidence in said case did not prove said alleged additional consideration.

(4) That the plea alleging the failure of plaintiff to pay when due the sums owed for oil furnished was good, and that the replication alleging payment of all sums by plaintiff before, and without, any notice by defendant of an intention to demand prompt payment, or to exercise the option to declare said contract terminated if such payment was not promptly made, was not a good reply, and that the court should have sustained the demurrer to said replication.

(5) The errors assigned to the charge were: The failure to give several requests of the defendant, and the instruction given that, if the jury found for the plaintiff, they must find the amount figured out on the tabulated statement furnished by plaintiff, amounting, principal and interest, to $559,167.89.

1. We do not think the original contract as made was invalid for want of mutuality. The only basis of this contention is that the purchaser had no established business in the sale of bunker oil at Pensacola, and it is insisted that therefore its undertaking to take all of the oil it might be able to sell to ships at Pensacola during a fixed period was too indefinite an undertaking to afford a consideration for defendant's promise to sell to it all oil it might so need. It seems to us that the objection does not arise on the validity of the contract, but would relate alone to the possible ability to prove specific damages in case of a breach.

The contract was an undertaking on the purchaser's part to buy all of its requirements at Pensacola from the defendant. It clearly agreed not to buy for such requirements during the terms of said contract, except from the defendant. The defendant agreed to sell to plaintiff all such requirements up to certain fixed quantities. Here was the consideration of a promise both to do and to refrain from doing a certain thing as a consideration for the promise to sell certain goods at fixed prices. It was...