Tidewater Portland Cement Co. v. Lincoln
| Decision Date | 10 January 1923 |
| Docket Number | 60. |
| Citation | 120 A. 365,142 Md. 193 |
| Parties | TIDEWATER PORTLAND CEMENT CO. v. LINCOLN. |
| Court | Maryland Court of Appeals |
Appeals from Baltimore City Court; Walter I. Dawkins, Judge.
"To be officially reported."
Action by the Tidewater Portland Cement Company against S. Dana Lincoln, trading as the National Mortar Company, in which the defendant admitted the amount of plaintiff's claim, but alleged a set-off and counterclaim. Judgment for defendant on the counterclaim, and plaintiff appeals. Reversed, and new trial awarded.
Argued before BOYD, C.J., and BRISCOE, PATTISON, URNER, STOCKBRIDGE and ADKINS, JJ.
Vernon Cook and William J. O'Brien, Jr., both of Baltimore, for appellant.
William L. Rawls, of Baltimore, and Daniel Thew Wright, of Washington, D. C., for appellee.
The Tidewater Portland Cement Company, the appellant in this case, is engaged in the manufacture of cement at Union Bridge in Carroll county, Md., and the appellee, trading as the National Mortar Company, is a dealer in cement operating in the city of Washington. On January 27, 1916, in continuance of previous relations of the same nature, a contract was executed by which it was agreed that the appellee should purchase from the appellant 50,000 barrels of cement between the date of the contract and the end of the current calender year, in quantities not exceeding 10,000 barrels in any month. It was stipulated that the purchases of cement, thus agreed to be made, should be "at the market price, in carload lots, prevailing" in the territory covered by the contract, "at the time each order for cement" was "placed by the buyer with the seller." Article 11 of the agreement provided:
"That the territory covered by this contract is the District of Columbia, in which territory the buyer has the exclusive right to the sale of Tidewater Portland Cement during the life of this contract."
On January 28, 1916, the appellant wrote the appellee a letter stating:
"With further reference to contract entered into between the National Mortar Company and the Tidewater Portland Cement Company, dated the 27th day of January, 1916, and with particular reference to article 11 of said contract, it is hereby mutually agreed and understood that should at any time the Tidewater Portland Cement Company desire to sell cement in said territory, that they may do so without violating any of the terms or conditions of this contract, upon payment by the Tidewater Portland Cement Company to the National Mortar Company of a commission of fifteen cents per barrel."
Upon this letter was noted the appellee's acceptance.
For the year 1917 a sales agreement was executed in substantially the same form, so far as the questions here involved are concerned as the one applying to the prior annual period. By notation of both parties upon the letter just quoted, its terms were "extended to cover the year 1917." The transactions between them in respect to the sale of cement continued until the midsummer of 1918, but without the execution of a sales contract for that year. At the time of the severance of their trade relations, the appellee was indebted to the appellant in an amount conceded at the trial below to be $32,205.90 for cement and unreturned sacks.
Payments had been withheld by the appellee, to the total amount stated, because of his larger claims for commissions, under the terms of the letter referred to, and for damages resulting from the alleged breach by the appellant of its agreements with the appellee, for the sale and delivery of cement. The pending suit was brought by the appellant, and it has been contested solely upon the basis of the appellee's counterclaims, which were asserted by appropriate pleas. The appeal is from a judgment for $10,000 rendered in the appellee's favor in pursuance of the verdict of a jury. This result was equivalent to a recovery in the sum of $42,205.90, as the judgment was for an amount demanded by the appellee in excess of that admitted to be due the appellant.
The most interesting and important of the questions raised by the numerous exceptions in the record depend for decision upon the construction and application of the agreement relating to commissions on sales made by the appellant, in derogation of the appellee's exclusive selling rights, in the District of Columbia. All of the sales, upon which the commissions are claimed, were made by the appellant to the government of the United States. A large proportion of the cement thus sold was delivered and used beyond the territory to which the appellee's contractual right of sale was limited. The whole of the material supplied by the appellant to the government was ordered and required for purposes essential to the prosecution of the war with Germany. When the commission agreement upon which the appellee relies was entered into the nation was at peace. Every one of the transactions to which the commission claim refers was produced by the exigencies of war. The primary and decisive inquiry is whether the agreement is applicable to the subsequently developed and abnormal conditions with respect to which it is sought to be enforced.
The National Defense Act of June 3, 1916 (Comp. St. § 3115g), authorized the President, in time of actual or imminent war, to place orders, through the head of any department of the government, for such products or material as might be required. It was provided that compliance with such orders should be obligatory, and that they should take precedence over all other orders or contracts. A similar provision was contained in the Navy Purchase Act, of March 4, 1917 (39 St. at L. 1193 [U. S. Comp. St. 1918, U.S. Comp. St. Ann. Supp. 1919, §§ 3115 1/16b, 3115 1/16c]). By the Urgent Deficiency Act, of June 15, 1917 (U. S. St. at L., vol. 40, pt. 1, c. 29, p. 182 [U. S. Comp. St. 1918, U.S. Comp. St. Ann. Supp. 1919, § 3115 1/16d]), it was provided that "the owner or occupier of any plant in which ships or materials are built or produced" could be required "to place at the disposal of the United States the whole or part of the output of such plant, to deliver such output or part thereof in such quantities and at such times as may be specified in the order," and that compliance with an order issued under the act should be obligatory upon any person to whom it was given, and any such order should "take precedence over all other orders and contracts placed with such person." The act further declared that, if any person owning or operating a plant equipped for the production of material should refuse or fail to comply with an order thereby authorized, or to give preference to the United States in its execution, or should refuse to supply or manufacture the kind and quantities of materials ordered, at such reasonable prices as should be determined by the President, immediate possession of the whole or a part of such plant or material might be taken by him for use at such times and in such manner as he might consider necessary or expedient.
The deliveries of cement by the appellant to the government were in fulfillment of orders and contracts resulting from allocations of such material made by the Portland Cement Committee, one of the agencies organized by the Council of National Defense in the exercise of its authority to provide "in time of need" for "the immediate concentration and utilization of the resources of the Nation." U.S. St. at L. vol. 39, c. 418, § 2, p. 649; U.S. Comp. St § 3115c. Cement was required in large quantities for various construction purposes essential to the government's war measures. The plant of the appellant was so located as to be one of the most convenient sources of supply for a number of highly important military projects. The quantities of cement furnished by the appellant for such purposes aggregated 277,534 barrels.
When cement was needed for a particular project, the government would apply to the Portland Cement Committee, which would report as to the district and plant where it should be obtained. The order would then be placed by the agency requiring the material. The prices were determined by the Federal Trade Commission and were lower than the prevailing commercial rates. An industry failing to fill government orders would have been liable to the commandeering action authorized by statute, and, in any event, would have been seriously impeded in its operations by reason of the priority in transportation and fuel supply awarded to enterprises which were helping to meet the nation's military necessities. If the appellant corporation had refused to sell and deliver the cement on account of which commissions are here claimed, it is practically certain that it would have been incapable of performing any substantial part of its sales contract with the appellee, to which the commission agreement was incidental. His orders for cement to...
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