Western Petroleum Co. v. Tidal Gasoline Co.

• Citation: 284 F. 82
• Decision Date: 20 July 1922
• Docket Number: 3058.
• Parties: WESTERN PETROLEUM CO. v. TIDAL GASOLINE CO.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

284 F. 82

WESTERN PETROLEUM CO. v. TIDAL GASOLINE CO.

No. 3058.

United States Court of Appeals, Seventh Circuit.

July 20, 1922

Rehearing Denied September 7, 1922.

Henry Russell Platt, of Chicago, Ill., for plaintiff in error.

Edward W. Everett, of Chicago, Ill., for defendant in error.

Before BAKER, ALSCHULER, and EVANS, Circuit Judges.

EVAN A EVANS, Circuit Judge.

This writ of error is prosecuted to review a judgment in favor of plaintiff for $170,624.80.

Plaintiff Tidal Gasoline Company, an Oklahoma corporation, on October 22, 1918, contracted to sell defendant, Western Petroleum Company, an Illinois corporation, 10,000,000 gallons of gasoline, delivery to extend from date of contract to December 31, 1919. Terms of payment were as follows:

'The price per wine gallon of said gasoline shall be three and one-half (3 1/2) cents in buyer's cars, under the Standard Oil Company's tank wagon price, f.o.b. point of delivery, * * * Chicago market.'

During the period from January 18, 1919, to July 7, 1919, during which time plaintiff delivered 6,824,992 gallons of gasoline, the Standard Oil Company sold from its tank wagons in Chicago gasoline at a differential rate dependent upon the quantity sold: Less than 100 gallons, 23 cents; 100 and over, but less than 250 gallons, 21 cents; 250 gallons and over, 20 1/2 cents.

There was evidence that, in addition to the differential price at which gasoline was actually sold from tank wagons in Chicago, there existed another distinct price, which was announced to the trade in general; that it was upon this so-called 'announced price' that contracts in the oil trade were based, and that the phrase 'tank wagon price' referred to this 'announced price,' rather than to the price at which oil was actually sold from tank wagons in Chicago.

Plaintiff invoiced the gasoline delivered on the basis of 23 cents per gallon; defendant paid for it on the basis of 20 1/2 cents, which payment plaintiff accepted, reserving, however, its right to sue for the balance of 2 1/2 cents per gallon. Defendant pleaded payment. The narrow issue thus presented requires the interpretation of the words 'tank wagon price Chicago market.'

It is an elementary principle of judicial interpretation that the test to be applied is what the ordinary user of such language would understand the words under the circumstances to mean. Holmes, 'The Theory of Legal Interpretation,' 12 H.L.R. 417. Another familiar principle of construction provides that, while the standard of ordinary usage is prima facie the one to be applied, it is nevertheless competent to show that in point of fact in the particular trade to which the contract has reference the words to be construed have a peculiar and special trade meaning, and the parties, being members of that trade, must have understood the words in that special sense. Wigmore on Evidence, Secs. 2463, 2464; Williston on Contracts, Sec. 650. The two precise questions, then, are: (a) Was there sufficient evidence of the existence of the alleged trade usage to require its submission to a jury? and (b) Was the evidence admitted upon this point competent?

Inasmuch as the burden is upon defendant to show error, we may consider these issues as presented by its assignments of error, which in order are: (1) Admission of evidence showing a peculiar trade usage of the term in question; (2) submission of such question to the jury; (3) plaintiff's conduct in asking questions in regard to matters upon this issue which had been excluded by the court.

A usage, in order to change the plain import of language, must be general, certain, uniform, and of sufficient duration to justify an inference that the parties had it in view in making their contract. Its existence is a matter of fact, to be proved as any other matter of fact. It is competent for a witness experienced in the trade to state whether or not the usage existed, and, as long as he does not testify as to its effect, he is merely speaking as to a fact, and not stating a conclusion. Wigmore on Evidence, Secs. 379, 1954; 17 Corpus Juris, 498, and cases there cited. The usage being established, those engaged in the trade will be presumed to have contracted with reference to it, and actual knowledge of it need not be proved. Silverstein v. Michau, 221 F. 55, 137 C.C.A. 79; Steidtmann v. Joseph Lay Co., 234 Ill. 84, 84 N.E. 640.

As an incident pertaining to the usage contended for it was competent to show the practice of the Standard Oil Company in informing the trade of its 'announced price,' as well as the fact that...