United States Plywood Corp. v. Hudson Lumber Co., 130

• Decision Date: 10 February 1954
• Docket Number: Docket 22894.,No. 130,130
• Citation: 210 F.2d 462
• Parties: UNITED STATES PLYWOOD CORP. v. HUDSON LUMBER CO. et al.
• Court: U.S. Court of Appeals — Second Circuit

210 F.2d 462 (1954)

UNITED STATES PLYWOOD CORP. v. HUDSON LUMBER CO. et al.

No. 130, Docket 22894.

United States Court of Appeals Second Circuit.

Argued January 7, 1954.

Decided February 10, 1954.

George H. Schwartz, New York City (Austrian & Lance, Carl J. Austrian, Schwartz, Nathanson & Cohen, Isadore H. Cohen, and Zelig R. Nathanson, New York City, on the brief), for defendants-appellants.

Sydney Krause, New York City (Krause, Hirsch, Levin & Heilpern, Raymond T. Heilpern, and Bernard Wexler, New York City, on the brief), for plaintiff-appellee.

Before CHASE, Chief Judge, CLARK, Circuit Judge, and GIBSON, District Judge.

CLARK, Circuit Judge.

In this action the plaintiff, United States Plywood Corporation, sought to recover the sum of $193,180.65 alleged to be due for cedar logs sold and delivered by it to the Hudson Lumber Company under a contract guaranteed by the Eagle Pencil Co. The answer of Hudson and Eagle contained an affirmative defense and a counterclaim for rescission of the contract based upon the ground of mistake. Plaintiff moved to strike the defense and counterclaim and for summary judgment upon the counterclaim; and this motion the district court granted in full in a reasoned opinion holding defendants not entitled to rescind, reported in D.C.S.D.N.Y., 113 F.Supp. 529. This appeal by the defendants is from the order and judgment thus entered. Some months after the judgment and appeal the judge amended his order by making a finding of no just reason for delay and expressly directing judgment, thus bringing it within the formal requirements for finality specified in amended Fed.Rules Civ.Proc. rule 54(b). Though the parties have not now raised the question, nevertheless we must still determine the appealability of the judgment, and are constrained to find here not "multiple claims," but merely a defense to a claim on contract not justifying appeal even under the amended form of the rule. Pabellon v. Grace Line, 2 Cir., 191 F.2d 169, certiorari denied Coston Supply Co. v. Pabellon, 342 U.S. 893, 72 S.Ct. 201, 96 L. Ed. 669; Leonidakis v. International Telecoin Corp., 2 Cir., 208 F.2d 934; All American Airways, Inc., v. Elderd, 2 Cir., 209 F.2d 247.

For a succinct, but lucid, exposition of the now long-standing dispute between the parties we turn to Judge Dimock's opinion, 113 F.Supp. at pages 530, 531:

"The contract was dated December 9, 1947. It called for the sale and delivery by Plywood to Hudson of all the merchantable cedar logs to be derived by Plywood from a tract of about one billion feet of timber in the State of California, known as the LaTour Timber, and the payment therefor by Hudson of Plywood\'s cost of such logs, as defined in the contract, plus 10% of such cost. A time limit of 25 years was fixed by the contract.

"The LaTour Timber consisted of pine and fir besides the cedar. The contract recited that all of the timber was to be cut at the same time and the logs of all three kinds delivered at substantially the same point, the cedar for Hudson and the pine and fir for Plywood. It provided in substance that, of the cedar logs, only those which scaled 50% merchantable should be delivered.

"The definition of cost included `logging costs\' and provided `logging costs * * * shall be computed on a common cost per M ft. for all species derived from the LaTour timber and this common cost will be the cost per M ft. of cedar logs delivered to Hudson hereunder.\'

"A few months after the signing of the contract and before any logs had been delivered a controversy arose over the interpretation of this definition which is the basis of Hudson\'s plea for rescission on the ground of mistake. Plywood contended that the common cost should be divided in proportion to the gross footage delivered of each of the three kinds of logs while Hudson and Eagle contended that the apportionment should be according to the net merchantable footage delivered of each. This makes a substantial difference because there is a larger unmerchantable content in the average cedar log than in the average pine or fir log. Thus if the logging cost were apportioned according to the merchantable footage in each log delivered to the common destination instead of the total footage in each log delivered there, the cedar would bear a much smaller part of it."

The controversy as to the proper method of computing the logging costs and hence the sale price of the cedar logs developed at least as early as the summer of 1948, although payments on account were made and deliveries were accepted as late as March, 1953, after the interposition of the counterclaim in this action. But meanwhile there was much interim activity as to the contract's meaning. The plaintiff's firm of certified public accountants (being induced by plaintiff to change their original conclusions, according to one of a series of factual allegations made by defendants) determined the cost covering each period from 1948 on according to the basis asserted by plaintiff; and plaintiff relies on their finding as final under the contract. Defendants in 1949 brought an action for a declaratory judgment in a federal court in California which was stayed pending arbitration under a mandatory arbitration provision of the contract, a decision affirmed on appeal. Hudson Lumber Co. v. U. S. Plywood Corp., 9 Cir., 181 F.2d 929. Hudson then sought arbitration which resulted in a 2-to-1 decision against it by the arbitration board,...