Wells v. Hartford Manilla Co.

• Citation: 55 A. 599,76 Conn. 27
• Court: Supreme Court of Connecticut
• Decision Date: 24 July 1903
• Parties: WELLS et al. v. HARTFORD MANILLA CO.

55 A. 599

76 Conn. 27

WELLS et al.

v. HARTFORD MANILLA CO.

Supreme Court of Errors of Connecticut.

July 24, 1903.

Appeal from Superior Court, Hartford County; Alberto T. Roraback, Judge.

Proceedings in the receivership of the Hartford Manilla Company. Appeal by W. S. Wells, receiver, from the allowance of a claim presented by the Burgess Sulphite Fibre Company. Reversed.

December 15, 1899, the Burgess Sulphite Fibre Company, manufacturer of paper pulp, and the Hartford Manilla Company, manufacturer of paper, entered into a written contract, known as "Contract A," by which the first-named company agreed to furnish, and the last-named company to receive, 1,300 tons of sulphite pulp, of a designated standard, at the price of $2.25 per 100 pounds, f. o. b. Woodland Switch Station, Burnside, Conn., or National Paper Mill, Ballston, N. Y. The contract contained the following provision: "Shipments as ordered, but in any event all to be shipped before Jan. 1, 1901." The same day another contract, known as "Contract B," for 220 tons of bleached sulphite pulp, was made. The price agreed upon was $3 per 100 air-dry pounds. The conditions as to delivery were identical with those contained in Contract A. Between the date of the contract and April 2, 1900, 278 1/2 tons of pulp were ordered and delivered under Contract A. Some payments were made on account of these deliveries, but at the time of the appointment of the receiver for the manilla company $4,178.13 was due and unpaid for such delivered pulp. After April 2, 1900, no shipments were made, by reason of the manilla company's orders to that effect, although the fibre company was willing and anxious to make them, and urged that the necessary orders therefor he given. About March 1st a controversy arose between the parties as to the manilla company's obligations under the contract; the controversy being precipitated by the fact that the latter company was only ordering shipments at the rate of one car a week, while the contract amount averaged two cars a week, and the original expectation of the parties was that such should be the rate of shipment. A falling market for pulp and a diminishing and suspended business by the manilla company aggravated the situation. The fibre company conceded that its vendee had the right to order shipments at its pleasure, as long as a reasonable time was given to fill the entire order, but its correspondence urging increased shipments developed a claim on the part of the manilla company that by verbal agreement it was not to be held to order more pulp in the whole than its business needs required. Correspondence followed until April 3d, when the manilla company telegraphed that it was overcrowded with pulp, and directed shipments to stop. A letter which supplemented the telegram assigned as the reason for the cessation of shipments that the mill was shut down, and that seven car loads of pulp were already on hand, and added: "Do not ship us any more until we order it forward. We cannot take in another pound." The correspondence between the parties as to the vendee's right under a verbal agreement to limit the total of its orders to its needs continued. The fibre company admitted the manilla company's right to suspend orders for the time being, but insisted upon the latter's duty to receive the whole amount ordered, and to give its orders therefor in a reasonable time. The latter company contended for its right to limit its total orders as indicated, but at all times admitted its obligation to take from the fibre company all the pulp it (the manilla company) used, and repeatedly stated that it was so doing and inteuded to so do. May 10th the manilla company wrote that the situation at the mill was somewhat improved; that it was running practically half time, and working off the accumulated stock of material. Meanwhile the manilla company had fallen behind in its payments, and that matter also became the subject of correspondence. May 26th, in a letter urging prompt payment, the fibre company wrote as follows: "We note that we have made no shipments on your contract of December 15th since April 2d. We would appreciate your shipping orders in accordance with conditions of contract at an early date." May 31st the fibre company wrote a still more urgent letter, calling attention to the suspension of shipping orders, reciting what shipments had been made, and concluding as follows: "We would, therefore, repeat the request that we have made you several times, to favor us with shipping instructions at an early date, so that we may govern our shipments in accordance with your requirements so far as possible. We presume it would be much more satisfactory to you to have this go forward at regular intervals, instead of holding it for shipment during the last few months." June 6th the manilla company acknowledged this letter, and wrote: "We propose, however, to take all the sulphite which we use at contract price during the year 1000 of you." June 8th the fibre company replied, saying, among other things: "Your attitude in regard to taking the fibre which you agreed to take is inexplicable to us, and we trust, therefore, that we may have the pleasure of meeting you in New York, as suggested on ours of June 5th, so that we may talk matters over and see just where we are." June 19th the fibre company wrote again, urging payment of its account, and adding: "We want you to pay as you have agreed to pay, and to call on us for shipment at the rate you have agreed to take, and which we have bound ourselves to ship." June 23d the manilla company replied as follows: "Yours of the 19th inst. at hand. As we have already explained to you, that on account of the product of our mill having been taken by one concern, and that product having been shut off without notice, and being obliged to depend on an open market (a falling and dull market) for our orders, and with a large supply of raw material on hand, you can readily understand why we have not been able to order and consume more sulphite. We are having some orders, but are still running short time. We hope to be able to run full time very soon, and also hope to use a large quantity of sulphite. We have already stated to you that we are buying sulphite from you only, and shall continue to take all our supply from you. If you are inclined to treat us fairly, as you have expressed, we think this explanation of the case should be accepted and satisfactory to you." Subsequently two letters passed with relation to the unpaid account, when, on July 2d, the fibre company wrote, threatening suit if payment was not promptly made. In this letter was contained this sentence: "In the meantime you are taking no fibre whatever on your contracts as you agreed to take." July 17th the fibre company brought suit. July 31st a receiver was appointed for the manilla company upon the complaint of William Wells & Co., dated July 28th. No pulp was ordered by or delivered to either the manilla company or its receiver after April 2d. The receiver refused to receive the undelivered balance of said pulp, and closed out the business and sold the property of the company without doing so. None of the bleached pulp called for by Contract B was ever ordered or shipped. Prior to April 17th the fibre company were unable to furnish it. On that day it wrote the manilla company that the mill for its production had started, and asking for shipping orders. None were given. The court allowed as a preferred claim the costs of said suit, to wit, $66.20, and a general claim of $9,144.13, in which was included said sum of $4,178.13 and the sum of $4,966, being the amount assessed as damages "by reason of the failure of the Hartford Manilla Company to receive the balance of 1,241 1/2 tons of pulp" called for by the two contracts; said damages being assessed at $4 per ton. The appeal was taken from the allowance of said $4,966 only.

Edward D. Kobbins, for appellant.

Charles H. Briscoe and John it. Buck, for appellee.

PRENTICE, J. (after stating the facts). The allowance of that portion of the claim of the Burgess Sulphite Fibre Company appeal ed from is supported before us in argument upon two grounds, to wit: (1) That there was such a breach of the contracts before the appointment of the receiver that the claimant was then entitled to maintain an action thereon against the manilla company, and recover full damages, as for contract broken; and (2) that the refusal of the receiver to abide by the contracts after his qualification itself furnished a basis for the allowance.

The first contention assumes the existence of a matured claim prior to the receivership proceedings. If this assumption is correct, the right to an allowance of the claim follows The claimant's brief makes the date of the breach April 3d, when the telegram stopping shipments was sent. "This refusal to receive any more goods," the brief says, "gave the fibre company the right to bring suit immediately for damage on the whole contract, and to recover whatever damages it might be able to show it had suffered by reason of not being permitted to deliver the goods under the contract down to January 1, 1901." This contention, we think, is not well founded, whether it be made as of April 3d, or any other subsequent date prior to the appointment of the receiver. The contracts called for no regularity in the vendee's demands for the pulp. It did not forbid suspensions of such demands. Shipments were, by the express provisions of the agreement, to be made as ordered; the only limitation being that the whole amount was to be shipped before January 1, 1901. This limitation naturally implied that the orders for shipments should be so given that they might be reasonably filled before January 1, 1901. It could imply no more. There could by no 'possibility be implied therefrom an agreement that the vendee should so make his orders that shipments might be made at a uniform rate during the term,...