Case ID: wis_140/html/0073-01.html
Source: Caselaw Access Project
Author: {"author": "Barnes, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Badger State Lumber Company, Respondent, vs. G. W. Jones Lumber Company, Appellant.
    
      May 14
    
    June 3, 1909.
    
    
      Executory contracts: Stopping performance: Remedies: Damages for breach: Rights of parties, when determined: Entire contracts: Grounds of rescission: Pleading: Waiver: Delivery f. o. h. cars: When title passes.
    
    1. Where specific performance of an executory contract cannot be enforced, either party may by explicit order stop performance by the other, subjecting himself thereby only to a liability to the other party for compensatory damages for such breach.
    2. A contract for the sale of lumber to be manufactured, graded, tallied, hauled, and delivered on board cars at such times as cars are furnished by the purchaser, title to remain in the seller until the lumber is shipped and paid for, is executory so far as it relates to lumber not delivered at the time of a renunciation of the contract by the purchaser.
    3. The rights of the parties under such a contract must be determined as of the date the purchaser renounces his contract and refuses to carry it out.
    4. A contract requiring a commodity to be shipped in carload lots as cars are furnished by the purchaser, each car shipped before a designated date to be paid for in "cash fifteen days from date of shipment, is apportionable and not entire.
    5. Under such a contract the purchaser may receive part of the commodity and'may breach the contract as to the portion not delivered without subjecting himself to liability for the purchase ’price thereof, provided the contract has not been performed by the seller as to the undelivered portion.
    
      6. Ordinarily, facts which will warrant a rescission must have existed at the time the contract was made.
    7. In an action to recover the contract price of lumber the defendant, having by answer denied plaintiffs right to recover on such cause of action, may, by counterclaim, plead that if it should be held liable to take and pay for any portion of the lumber it should be allowed damages by way of recoupment and setoff because of poor manufacture, without thereby waiving any rights it might have under an attempted rescission.
    8. A contract obligating the seller to deliver a commodity f. o. b. cars is not a sale in prwsenti, either when made or when the commodity is manufactured, since the title does not pass to the purchaser until the commodity is delivered by loading it on the cars.
    Appeal from a judgment of tbe circuit court for Pepin county: E. W. Helms, Circuit Judge.
    
      Reversed.
    
    On April 10, 1901, tbe plaintiff and defendant entered into a contract by tbe terms of which tbe plaintiff agreed to sell and tbe defendant agreed to buy all of plaintiff’s stock of soft elm lumber. Tbe contract recited that -a considerable portion of tbe lumber was tben sawed and in pile in tbe city of Durand, and tbat tbe remainder of tbe stock was to be sawed from logs at tbe Plummer mill in Durand, and at John Moy’s mill in tbe town of Canton, Buffalo county, Wisconsin, and at Julliot’s mill in tbe town of Waterville, Pepin county, Wisconsin, and at Gates’s mill in tbe town of Erankfort, Pepin county, Wisconsin, and tbat so much of tbe logs as were unsawed were to be sawed as soon as possible under tbe supervision of tbe plaintiff. Tbe plaintiff agreed to manufacture tbe portion of tbe logs not yet sawed into sucb thicknesses as tbe defendant might direct, and to cause tbe sawing to be done in a good and workmanlike manner; also to load tbe lumber sold (estimated at 550,000 feet more or less) into cars at Durand, Wisconsin, at sucb time as cars were provided by tbe defendant, but at tbe expense of tbe plaintiff. Tbe plaintiff agreed to ship tbe lumber as soon as same was in shipping condition. Tbe National Hardwood Lumber Association rules were to govern tbe inspection and scale, and the inspection and scale were required to be made at the-mill and were to be final. It was further provided that both of the parties shonld have their inspectors present when the-lumber was being loaded, if they so elected, but, in the event of the failure of the defendant to furnish an inspector, the-inspection made by the plaintiff should be final. In case any dispute as to scale or grade arose between the inspectors, for the parties to the contract, which could not be settled by them, it was agreed that such dispute should be adjusted by an inspector of the National Hardwood Lumber Association. It was further agreed that the lumber should be well sawed,, of proper thickness, edged and trimmed, and the logs so sawed as to produce as much of the upper grades of lumber as possible. The defendant agreed to ship all of said lumber on or before January 1, 1908. If any stock remained in the yard, after that time, it was agreed that it should be jointly estimated by the representatives of the parties and be paid for according to such estimate. Eor all water elm, red elm, and gray elm the defendant agreed to pay the plaintiff, f. o. b. Durand, for No. 3 common and better, $20 per thousand feet, upon the following terms of payment: “Cash fifteen days-from date of shipment, less two per cent. Sixty days from date of shipment, net.” It was further agreed between the parties that title to the lumber should remain in the plaintiff' until same was shipped out or paid for according to the estimate of January 1, 1908.
    On November 27, 1907, plaintiff shipped to defendant, at its request, one carloa-d of lumber. This car was invoiced at the contract price, and contained upper grades of lumber,, and was paid for at the contract price. On November 29, 1907, the defendant wrote plaintiff as follows:
    “It will be impossible for us to take the soft elm we bargained with you for, as the stock has not been sawed at all in accordance with our instructions. Our Mr. B. G. Harper, whom we sent there to take up a trial car of the stock, explained the matter fully to your Mr. Pierce, so yon know what our grounds for complaint are against the lumber. We regret to advise you of this, but if you will look up the correspondence we have had with you in reference to sawing this stock, you will find that we gave you explicit and positive instructions regarding it, and these instructions have not been observed. Under these circumstances we feel justified in turning the stock down.”
    On the day following the plaintiff acknowledged receipt of this letter, in which it denied that the lumber was not properly manufactured, and stated that if the lumber was not shipped out by the defendant in accordance with the terms of the contract it would cause the lumber to be estimated, and commence action to recover the contract price of the same. On January 14, 1908, the plaintiff again wrote the defendant, calling its attention to the provision in the contract providing for an estimate of the lumber by joint representatives of the parties, and notifying the defendant that it was ready to proceed with such estimate, and further stating that if the defendant did not appear on or before January 28, 1908, it would on that date proceed to take the estimate without the co-operation of the defendant, and bring suit to recover the contract price. The defendant did not elect to take any part in making the estimate, and the plaintiff caused an estimate to be made in accordance with the statement contained in its letter of January 14th. On February 29, 1908, the plaintiff forwarded to the defendant a bill for the contract price of the lumber in accordance with the estimate made by it. The amount of such bill was $11,078.16. The defendant refused to pay, and this action Avas brought to recover the contract price of the lumber and resulted in a verdict and judgment in favor of the plaintiff for such contract price, from which judgment this appeal is taken.
    For the appellant there was a brief by Nash & Nash, attorneys, and O. A. Ingram, of counsel, and oral argument by L. J. Nash.
    
    They contended, inter alia, that contracts like the one in suit providing for the sale and delivery of a large quantity of lumber or other commodities in carload lots, with separate payments for the separate shipments, are manifestly severable; each delivery separates and executes the contract pro tanto, leaving what is still undelivered subject to any lawful objections, even though the lots already delivered and received were subject to the same objections. Such a partial delivery is not an acceptance of any part of the whole quantity not yet delivered. Ketchum v. Wells, 19 Wis. 25; McDonald v. Gardner, 56 Wis. 35 ; Hoffman v. King, 58 Wis. 314; 8. G. 70 Wis. 372; Gill v. Benjamin, 64 Wis. 362; McMillan v. Fox, 90 Wis. 173; Murphy v. 8agola L. Co. 125 Wis. 363; In re Kelly, 51 Eed. 194; Hubbard v. George, 49 Ill. 275; Gooh v. Brandéis, 3 Mete. (60 Ky.) 5£>5; Holl'field v. Blach, 20 Mo. App. 328; Ameñcan P. P. & B. Go. v. OaJces, 64 Mo. App. 235; Farmer v. Gray, 16 Keb. 401, 20 H. W. 276; Visscher v. GreenbanTc A. Go. 11 Hun, 159; Pacific Goast F. Go. v. Bravincler, 14 Wash. 315, 44 Pac. 544; Conway v. Fitzgerald, 70 Vt. 103, 106, 39 Atl. 63'5; Glarlc v. Wheeling 8. Works, 53 Eed. 494; Greswell R. & G. Go. v. Martindale, 63 Eed. 84, 86 ; Bennett v. Shaughnessy, 6 Utah, 273, 277, 22 Pac. 158; Eastern F. Go. v. Gorbin, 182 Mass. 590. The defendant had the legal right to renounce and repudiate the contract, so long as it remained executory; absolutely and without recourse if for good cause, but just as absolutely without any cause; in the latter case, however, subject to defendant’s liability to compensate the plaintiff for all resulting damages. Ward v. American H. F. Go. 119 Wis. 12, 25; Fountain City D. Go. v. Peterson, 126 Wis. 512 ; Engeldinger v. Stevens, 132 Wis. 423; Collins v. Delaporte, 115 Mass. 159, 162; Oklahoma V. Go. v. Garter, 116 Ga. 140, 94 Am. St. Rep. 112; Gibbons v. Beate, 51 Minn. 499, 22 L. R. A. 80. The measure of damages resulting from a wrongful renunciation of a contract of sale is never the contract price, but the difference between such contract price and the market value of the chattels. The title to the lumber never passed to the defendant. The plaintiff still owns it.. The contract provided that the title should not pass until the lumber was “shipped out or paid for according to the estimate ■of January 1, 1908.” Eliminating the element of a wrongful renunciation or repudiation of an executory contract of sale, it is still the law that the seller cannot recover the purchase price until after the title has passed.” Benj. Sales, sec. 311; 24 Am. & Eng. Ency. of Law (2d ed.) 1118 — 1120; Smith v. Barron Go. 44 Wis. 686; Ganson v. Madigan, 9 Wis. 146; S. G. 13 Wis. 67; S. G. 15 Wis. 144; Pike v. Vaughn, 39 Wis. 499; Hoffman v. King, 58 Wis. 314; S. 0. 70 Wis. 372; Ketchum v. Wells, 19 Wis. 25; Hill v. Ghipman, 59 Wis. 211; Manufacturers' Baníe v. Rugee, 59 Wis. 221; State ■ex rel. Vilas v. Wharton, 117 Wis. 558; Mason v. Decker, 72 1ST. Y. 595; Mitchell v. Be Glair, 165 Mass. 308; Brocklen v. Smeallie, 140 N". Y. 70; Jenkinson v. Monroe Bros. & Go. 61 Mich. 454, 28 N. W. 663.
    For the respondent there was a brief by Wickham & Farr, ■and oral argument by James Wickham.
    
    They contended, inter alia, that the authorities in this state and elsewhere sustain the proposition that the vendor in an executory contract of sale of personal property, on refusal of the vendee to accept the goods, may store the goods and recover the contract price. Nisbet v. Gill, 38 Wis. 657; Boyington v. Sweeney, 77 Wis. 55, 68; Pratt v. S. Freeman & Sons Mfg. Go. 115 Wis. 648; Hartman F. & G. Go. v. Krieger, 137 Wis. 650, 119 N. W. 347; Dustan v. Me Andrew, 44 N. Y. 72; Hayden v. Demets, 53 N. Y. 426; Mason v. Decker, 72 FT. Y. 595, 28 Am. Rep. 190; Bagley v. Findlay, 82 Ill. 524; McCormick H. M. Go. v. Markert, 107 Iowa, 340, 78 1ST. W. 33; Mitchell v. Le Glair, 165 Mass. 308; Van Brocklen v. Smeallie, 140 1ST. Y. 70, 35 U. E. 415, 416; Ganson v. Madigan, 15 Wis. 144. The rescission, if at all, must be total. Any act by the purchaser in recognition of the contract precludes his right to rescind. Churchill v. Price, 44 Wis. 540; Oream City Q. Co. v. Friedlander, 84 Wis. 53, 58, 59; Kingman & Co. v. Watson, 97 Wis. 596, 612; Zipp Mfg. Co. v. Pastorino, 120 Wis. 176; James Music Co. v. Bridge, 134 Wis. 510. A complaint or counterclaim for damages for breach of a contract is an affirmance of the contract, inconsistent with a claim that the contract has been rescinded, and is a waiver of any right to a rescission. Main v. Procknow, 131 Wis. 279; Pfeifer v. Marshall, 136 Wis. 51, 116 N. W. 871; Maxon v. Cedes, 136 Wis. 270, 116 IST. W. 758. Where the buyer accepts property and fails to object in a reasonable time that it does not comply with the contract, he waives his right to afterwards object that the property does not comply with the terms of the contract, and waives his right to recover damages on account of any alleged defects. Northern 8. Co. v. Wangard, 117 Wis. 624, 629; U. McCormick L. Co. v. Winans, 126 Wis. 649, 654; Ashland L., 8. & C. Co. v. Shores, 105 Wis. 122, 128; Forster, Waterbury Co. v. F. MacKinnon Mfg. Co. 130 Wis. 281.
   Barnes, J.

The rule is well settled that in executory contracts, where specific performance cannot be enforced, either party has the power to stop the performance on the other side by an explicit order to that effect, by subjecting himself to such damages as will compensate the other party for being stopped in the performance on his part at that point or stage in the execution of the contract. In such cases it is held that an action cannot be maintained to recover the contract price, but may be maintained to recover damages for the breach of the contract. Ward v. Am. H. F. Co. 119 Wis. 12, 25, 96 N. W. 388; Fountain City D. Co. v. Peterson, 126 Wis. 512, 106 N. W. 17; Merrick v. N. W. Nat. L. Ins. Co. 124 Wis. 221, 226, 102 N. W. 593; Tufts v. Weinfeld, 88 Wis. 647, 60 N. W. 992; Woodman v. Blue Grass L. Co. 125 Wis. 489, 494, 103 N. W. 236, 104 N. W. 920; Engeldinger v. Stevens, 132 Wis. 423, 424, 112 N. W. 507.

The decisions of this court upon the question under discussion are in liannony with the great weight of authority elsewhere. Mr. Page states the rule apjdicable where one party to a contract, who is not himself in default, has covenants still to he performed when the breach is committed by the other party, as follows:

“The adversary party cannot ignore the breach, perform the covenants of the contract on his part to be performed, and recover the entire contract price as if no breach had occurred. This state of facts often exists in breach by renunciation.” 3 Page, Contracts, § 1435. See cases cited in notes 2 and 3, p. 2219.

If the contract was still executory the defendant might breach it, and would thereby subject itself to the payment of such damages as would fairly compensate the plaintiff for the breach, and ordinarily such damages would be the difference between the contract price of the lumber and its value at the' time of the breach. Ganson v. Madigan, 13 Wis. 67, 72; S. C. 15 Wis. 144, 150; Chapman v. Ingram, 30 Wis. 290.

The general rule that a breach of an executory contract gives a right of action for damages for the breach and not for recovery of the purchase price is not modified by the case of Boyington v. Sweeney, 77 Wis. 55, 45 N. W. 938. It is there held that where the vendor tenders a delivery in accordance with the terms of the contract, and an actual delivery is prevented by the refusal of the vendee to accept and receive the article at the time and place agreed upon, the vendor may sue for and recover the purchase price. In this case the plaintiff failed to furnish cars within a reasonable time, and before they were furnished a portion of the logs sold were burned, and it was held that the offer to deliver was-tantamount to an actual delivery, and that the vendor had in fact performed his part of the contract. The case-of Pratt v. S. Freeman & Sons Mfg. Co. 115 Wis. 648, 92 N. W. 368, holds that where a vendor, in an executory contract for the sale of goods to be paid for on delivery, discovers that the vendeo has become insolvent, he may store the property for the buyer and sue for and recover the purchase price. No other case in this court is called to our attention that has any tendency to mitigate the rigor with which the general rule referred to has been enforced.

It is a conceded fact in the case that the defendant wrote plaintiff on November 29, 1907, stating explicitly that it would he impossible for it to take the stock bargained for. Certain reasons were stated in the letter for the decision arrived at, which were found by the jury to he groundless. The letter was received in due course of mail and was replied to by the plaintiff upon the day following its date. The important questions in the case therefore are: (1) Was the contract executory when defendant’s letter was received ? (2) If it was, did the defendant by its subsequent conduct waive the renunciation of the contract contained in its letter? Whatever difficulties the ease may present do not arise out of any uncertainty as to what the law is on the points involved. A correct application of the facts to the established rules of law is all that is necessary in order to determine the rights of the parties.

When does a contract, executory when made, become executed so that the vendor may sue and recover the purchase price of the article contracted for ? In the early case of Ganson v. Madigan, 13 Wis. 67, 72, the court held:

“Where the vendor has actually .taken all the steps necessary to vest the title to the goods sold in the vendee, he may sue for goods sold and delivered, and the rule of damages would be the contract price; but where he is ready and willing to perform, and offers to do' so, but the vendee refuses, even though the title is not vested in the vendee, the vendor still has his action on the contract for damages; but the rule of damages in such case would be the actual injury sustained, which is ordinarily the difference between the value of the property at the time of the refusal and the price agreed on.”

TRe contract in this ease was for tRe sale of a reaper, and tRe vendee was informed tRat Re could Rave Ris pick of a large number of reapers skipped to tRe agent of tRe vendor in knocked-down form. TRe vendee refused to make any selection, and tRe court Reid tRat because of tRe failure of the vendor to set up tRe reaper and make an offer or tender of it as an entirety Re could not recover tRe purckase price, but only damages for tRe breacR of tRe contract. TRe decision was re-examined at some lengtk and re-affirmed on a second appeal. 15 Wis. 144, 150. TRe rule adopted in this case Ras not been departed from in any substantial particular, and it has in effect been followed in a number of cases since decided. Tuffs v. Weinfeld, 88 Wis. 641, 60 N. W. 992; Hoffman v. King, 58 Wis. 314, 317, 17 N. W. 136; Ward v. Am. H. F. Co. 119 Wis. 12, 25, 96 N. W. 388; McMillan v. Fox, 90 Wis. 173, 62 N. W. 1052.

Under tRe autRorities cited, and assuming that tRe title to tRe lumber contracted for did not pass to tRe vendee in tRe contract, we fail to see any logical ground for saying that suck contract was not an executory one in so far as it related to lumber not delivered when tRe letter of renunciation was written. A portion of tRe lumber was sawed and in pile at Du-rand, Wisconsin. As to suck lumber it was necessary to separate tRe No. 3 and better lumber from tRat below tRe grade of No. 3 and to ascertain tRe quantity of tRe same. EacR party migkt furnisR an inspector, and in case of disagreement it was provided tRat an inspector of tRe National Hardwood Lumber Association should act as umpire to settle the dispute. If tRe vendee failed to select an inspector, then tRe vendor might inspect, and suck inspection skould be final. TRe vendor was required to Raul tRe lumber from the pile and deliver it on board cars at Durand. A portion of the lumber was at two or three different country mills several miles distant from Durand. TRe contract required suck lumber to be inspected and tallied in tRe same manner as tRat located at Durand, and also required the vendor to haul the same to Du-rand and deliver it on hoard cars. There was also a small quantity of lumber not sold under the contract mixed with that which was, and it necessarily would have to be separated before the contract was completed by the vendor. The evidence failed to show the expense which the plaintiff would necessarily incur in completing the contract, but it is apparent that it would be a very material item, and that the contract was not substantially performed by the vendor on November 29th. That it was ready, able, and willing to perform is not the equivalent of performance for the purposes of this case. Ganson v. Madigan, supra. The defendant might have ordered all of the lumber during the.month of December, and the plaintiff would have been obliged to grade, tally, haul, and deliver the lumber on board cars. Prior to November 29 th the defendant was not in default to the extent that it was not entitled to have the lumber delivered f. o. b. cars, and upon that date it renounced its contract and refused to carry it out. The rights of the parties must be determined as of that date, and we fail to see how we could logically hold that at that time the contract was even substantially performed by the plaintiff.

The contention that the contract was entire, and that the acceptance of and payment for one carload of the lumber was an acceptance of the entire stock and a waiver of any right to resist payment of the purchase price thereof, is not tenable. The contract required the lumber to be shipped in carload lots, and provided that each car shipped before January 1st should be paid for in “cash fifteen days from date of shipment, less two per cent. Sixty days from date of shipment, net.” The contract was an apportionable one, and the defendant might receive part of the lumber thereunder and breach the contract as to the portion which was not delivered without subjecting itself to liability for the purchase price thereof, provided the contract had not been performed by the plaintiff as to the undelivered portion of the stock. Ketchum v. Wells, 19 Wis. 25, 33; McDonald v. Gardner, 56 Wis. 35, 41, 13 N. W. 689; Clark v. Clifford, 25 Wis. 591; T. B. Scott L. Co. v. Hafner-Lothman Mfg. Co. 91 Wis. 667, 65 N. W. 513; McMillan v. Fox, 90 Wis. 173, 176, 62 N. W. 1052; La Coursier v. Russell, 82 Wis. 265, 52 N. W. 176; Hildebrand v. Am. F. A. Co. 109 Wis. 171, 85 N. W. 268; Tilton v. J. L. Gates L. Co. post, p, 197, 121 N. W. 331.

It is argued that the defendant waived any rights it might have under its attempted rescission of November 29th by counterclaiming in its answer for damages for alleged breaches of the contract on plaintiff's part. The cases of Main v. Procknow, 131 Wis. 279, 111 N. W. 508, and Pfeiffer v. Marshall, 136 Wis. 51, 116 N. W. 871, are cited to the point that a counterclaim for damages for breach of a contract is an affirmance of the contract and is inconsistent with and is a waiver of a plea of rescission. We do not understand that the defendant has ever asked that the contract be rescinded, or even claimed that any facts existed which would warrant a. rescission. Contracts are usually rescinded because a party has been fraudulently induced to enter into the contract obligation. The facts that will ordinarily warrant a rescission must have existed at the time the contract was made. The position of the defendant here was that the plaintiff had breached its contract in material particulars and that for such reason defendant would not perform. The defendant by its pleading denied the right of the plaintiff to recover the contract price of the lumber. It then stated that, if it should be held liable to take and pay for any portion thereof, it should be allowed $5 per thousand damages by way of recoupment and setoff because of poor manufacture. We do not think this answer comes within the principle of the cases cited, or that there was any waiver on defendant’s part of its right to insist that the only recovery that could be had against it was the amount of damages occasioned by the breach of its contract.

It is urged that the contract constituted a sale of the lumber in prcesenti, either when made or when the lumber was manufactured, notwithstanding the reservation of title made by the vendor, until the lumber was paid for. The contract obligated the vendor to deliver the lumber f. o. b. cara. A number of such contracts have been before this court, and it has been held that the title under such a contract does not pass to the vendee until the article sold is delivered by loading it on cars. Vogt v. Schienebeck, 122 Wis. 491, 100 N. W. 820; Fromme v. O’Donnell, 124 Wis. 529, 103 N. W. 3; Murphy v. Sagola L. Co. 125 Wis. 363, 103 N. W. 1113; Engeldinger v. Stevens, 132 Wis. 423, 112 N. W. 507; John O’Brien L. Co. v. Wilkinson, 117 Wis. 468, 94 N. W. 337; State ex rel. Pittsburgh C. Co. v. Patterson, 138 Wis. 475, 120 N. W. 227. The contrary rule adopted in Boyington v. Sweeney, 77 Wis. 55, 45 N. W. 38, has been overruled. Vogt v. Schienebeck, supra.

The conclusions reached render i-t unnecessary to consider various other matters discussed in the briefs and in the oral argument.

By tJie Oourt. — The judgment of the circuit court is reversed, and the, cause is remanded for further proceedings according to law.