Whiting Stoker Co. v. Chicago Stoker Corporation
| Decision Date | 17 January 1949 |
| Docket Number | No. 9563.,9563. |
| Citation | 171 F.2d 248 |
| Parties | WHITING STOKER CO. v. CHICAGO STOKER CORPORATION. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Casper W. Ooms and G. Donald Whitehouse, both of Chicago, Ill., for appellant.
Harry Abrahams and Ode Rankin, both of Chicago, Ill., for appellee.
Before MAJOR, Chief Judge, MINTON, Circuit Judge, and LINDLEY, District Judge.
Defendant appeals from an adverse judgment in an action brought for a declaratory judgment upon a contract dated September 2, 1944, under which plaintiff was purchaser and defendant seller of a going business engaged in manufacturing, selling and servicing stokers. Ignoring provisions of no moment here, briefly, defendant sold to plaintiff with covenants of warranty and obligated itself to refrain, for a period of 30 years, from using its trade-names, and, for a like period, from making stokers like those previously made. In return, plaintiff was to pay immediately certain sums of money and, in addition, certain emoluments based on its net sales of stokers during the next 15 years. Plaintiff agreed also to provide parts and service for maintenance of stokers previously sold by defendant.
The crucial contractual provisions, in so far as the present action is concerned, are those relating to the inventory of parts in the hands of defendant at the time of the execution of the contract, in pertinent part, as follows:
The contract further provided that the parts would be stored by plaintiff at its expense and that plaintiff would furnish defendant a monthly account of those actually used, accompanied by remittance of the amount shown to be due.
After execution of the contract, the stock of parts was removed to the Superior, Wisconsin, plant of plaintiff. At the end of the year plaintiff had availed itself of only a portion of the inventory and, after an audit and reconciliation had been made of the number of parts used, plaintiff sent defendant a check covering the amount due for the stoker parts it had actually utilized. Meanwhile the parties had disagreed respecting the stoker parts plaintiff was obligated to buy within a year, plaintiff contending that the contract required only the purchase of parts actually used during the first year and defendant insisting that under the provisions of paragraph B-2, all "reasonably usable" parts were to be purchased within the first year, irrespective of whether they were actually taken within that period. This controversy led to the institution of the declaratory judgment action.
The District Court held the contract to be ambiguous and, after resort to evidence dehors the instrument, found that the parties intended by paragraph B-2 to require plaintiff to purchase only "that portion of the remainder of said stoker parts which the plaintiff could reasonably utilize within one year from September 2, 1944." (Emphasis added.) The court found further that defendant's acceptance of the check sent by plaintiff in payment for parts actually used during the first year constituted an accord and satisfaction of the disputed liability of plaintiff to purchase and pay for, within one year, all the reasonably usable parts.
The defendant contends that the contract is without ambiguity and, hence, that parol evidence as to its meaning was improperly received and that the check sent by plaintiff to defendant at the end of the first year, being merely payment for parts actually used during the year, did not constitute an accord and satisfaction of disputed liability.
Paragraph B-2 of the contract obligated plaintiff to "purchase and pay for within one year from date hereof all of that portion of the remainder of said stock of parts which can reasonably be utilized by the buyer." We think these words can reasonably convey only one meaning; namely, that within one year, plaintiff was to purchase and pay for all parts that it could reasonably utilize, irrespective of whether the parts were actually used during the first year or thereafter. But plaintiff contends, and the trial court agreed, that, when read in conjunction with other paragraphs of the contract, paragraph B-2 is ambiguous.
A contract is ambiguous if, and only if, it is reasonably or fairly susceptible of different constructions; it is not ambiguous if the court can determine its meaning without any guide other than a knowledge of the simple facts on which, from the nature of language in general, its meaning depends. 17 C.J.S., Contracts, § 294, and cases there cited. Contracts are not rendered ambiguous by the mere fact that the parties do not agree upon their proper construction. National Pigments & Chemical Co. v. C. K. Williams & Co., 8 Cir., 94 F.2d 792; Andrews v. St. Louis Joint Stock Land Bank of St. Louis, 8 Cir., 107 F.2d 462, certiorari denied Cantley v. Andrews, 309 U.S. 667, 60 S.Ct. 592, 84 L.Ed. 1014, rehearing denied, Id., 309 U.S. 697, 60 S.Ct. 711, 84 L.Ed. 1036. An ambiguous contract is one capable of being understood in more senses than one; an agreement obscure in meaning, through indefiniteness of expression, or having a double meaning. Anderson & Kerr Drilling Co. v. Bruhlmeyer, Tex.Civ.App., 115 S.W.2d 1212. A possibility of doubt is not sufficient, for it is out of such possibilities that controversies arise. It is the duty of the court to ascertain by judicial interpretation, not whether a doubt may be asserted, but whether any ambiguity really exists. Northwestern University v. Hamberg, 237 Ill. 185, 86 N.E. 734. Similar judicial expressions are legion, and may be shortly summarized by saying that a contract is ambiguous when the language used is reasonably susceptible of more than one meaning. Ultimately, the question of whether an ambiguity exists is to be determined by the court as a question of law. 17 C.J.S., Contracts, § 617; Golden Gate Bridge & Highway Dist. of California v. United States, 9 Cir., 125 F.2d 872, certiorari denied, 316 U.S. 700, 62 S.Ct. 1298, 86 L.Ed. 1769.
With these elementary principles in mind, we turn to a consideration of the pertinent parts of the instrument as a whole to determine whether the parties employed any language which results in making paragraph B-2 ambiguous.
In paragraph A-2, the seller gave the buyer the option to purchase, within one year, the remainder of the parts. It seems obvious that there is nothing inconsistent between this right of plaintiff to purchase all the inventory and the requirement of paragraph B-2 that it must purchase all of the reasonably usable parts by the end of the first year. One paragraph gives plaintiff the right to make a maximum purchase and sets the...
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