Case Name: THREE STATES COAL CO. v. MOLLOHON MFG. CO.
Court: Supreme Court of South Carolina
Jurisdiction: South Carolina
Decision Date: 1926-11-04
Citations: 137 S.C. 345
Docket Number: 12097
Parties: THREE STATES COAL CO. v. MOLLOHON MFG. CO.
Judges: Mr. Justice Watts and Mr. Acting Associate Justice C. J. Ramage concur..
Reporter: South Carolina Reports
Volume: 137
Pages: 345–357

Head Matter:
12097
THREE STATES COAL CO. v. MOLLOHON MFG. CO.
(135 S. E., 380)
April, 1925.
Messrs. Hunt, Hunt & Hunter, for appellant,
Mr. Steve C. Griffith, for respondent,
November 4, 1926.

Opinion:
The opinion of the Court was delivered by
Mr. Justice StabrER.
This is an action on a contract for sale of coal.
The complaint alleges that the plaintiff and the defendant, on or about September 1, 1923, executed a written contract for the sale to the defendant by the plaintiff of 2,000 net tons of' coal of 2,000 pounds each, at a rate of $2.40 per net ton, to be shipped, approximately one car weekly, beginning September 1, 1923, and continuing until April 15, 1924, a copy of the contract being attached to the complaint and being set forth in full in this opinion; that the defendant on divers dates during the continuance of the contract notified and directed the plaintiff not tO' ship coal according to the terms of the contract and that during the said period the plaintiff by the direction of the defendant was allowed to ship only four cars of said coal, which cars were shipped on November 12, November 14, November 19, and November 26, 1923, and which aggregated a total tonnage of only 219.7 net tons, and that the plaintiff was not allowed to ship the balance of coal called for by the contract, to wit, 1,780.3 net tons; that during all of the contract period the plaintiff was ready and able to deliver said coal, so notified the defendant, and requested the defendant to allow delivery of said coal, and that the defendant refused and neglected to accept the coal and directed the plaintiff not to make shipments thereof. Judgment in the sum of $1,087.78, alleged to be due as damages for breach of the contract, is demanded.
The contract sued on is as follows:
"Three States Coal Company,
"Bluefield, W. Va.
"Coal Contract.
"Three States Coal Company, of Bluefield, W. Va., hereinafter known as the seller, sells 'to Mollohon Manufacturing Company, of Newberry, S. C., hereinafter known as the buyer:
"Quantity: Two thousand (2,000) net tons of 2,000 pounds each. Approximately one car weekly, beginning at once and continuing until April 15, 1924.
"Grade: 'Star' banner run of mine — hopper or drop door equipment.
"Price: Two dollars and forty ceftts ($2.40) per net ton f. o. b. cars at mines.
"Contract effective September 1, 1923. Contract expires April 15, 1924.
"Conditions as below to govern this agreement:
"(1) Terms of payment, cash on or before the tenth of each month for all coal shipped during the preceding month. Accounts not paid when due will be subject to sight draft without notice and with interest from date of maturity. Terms of payment being essence of this contract, noncom pliance therewith shall give the seller privilege of cancellation, and waiver in any case shall not be construed as destroying this right, and, also, the right to cancel this contract is especially reserved in the event the seller has reason to believe that the credit of the buyer is impaired.
"(2) In case of strikes, accidents, delay in transportation, shortage of labor, failure of the railroads to supply equipment suitable for loading or transporting the coal hereby sold and purchased, partial or complete embargoes imposed by originating railroads or connecting railroads over which shipments must be forwarded to the destination specified herein, stoppage or the partial stoppage of the mining of this coal or its shipment, to labor agitations and disturbances, to lockouts, to mine accidents or other causes beyond the immediate control of the seller, it is understood and agreed that the seller is only obligated to deliver the percentage of the coal named in this conrtact equal to the percentage of the capacity of the mine or mines producing the grade of coal named which is actually shipped during such period.
"(3) In case of failure by the buyer to order or accept this coal each month as agreed, the seller may, during the term of this contract, reduce the said tonnage the quantity the buyer failed to order or accept and shall also have the right to reduce the monthly installment for any or all succeeding months to the amount of the minimum tonnage taken in any of the preceding months.
"(4) Actual railroad weights, as ascertained by initial lines are to govern all settlements.
"(5) Shipments made by the seller to the buyer during any. one month shall constitute fulfillment of this contract for thatmonth and the tonnage herein contracted shall be cumulative only for such one-month period, except by mutual agreement."
The defendant demurred to the complainton the ground that it did not state facts sufficient to constitute a cause of action in that:
"I. Said complaint is based on the contract attached hereto as an exhibit and said contract shows on its face by the fifth paragraph thereof that shipments made during any one month constitute fulfillment for such month and that the tonnage should not be cumulative except for one-month period except by mutual agreement, and the complaint does not show that any such agreement was made.
"II. Because the contract on which this action is.based clearly shows that the tonnage contracted for should not be cumulative except by mutual agreement of the parties and the complaint does not show such agreement.
"III. Because the complaint, together with the contract which is made a part thereof, shows that the plaintiff was not required to hold tonnage for the defendant but that in case defendant failed to order the amount of tonnage in any one month, the plaintiff could reduce tonnage for succeeding months to said amount and was only liable to the defendant for the tonnage actually ordered.
"IV. Because complaint shows that the action is based entirely on the contract attached thereto as an exhibit, -and such contract, construed as a whole, shows that the tonnage was not to become cumulative against either party and that the contract was fully performed when the amount of tonnage was shipped that was actually ordered."
The demurrer was overruled, and appeal is made from the order overruling the demurrer. The exceptions of the defendant are as follows-:
"I. Because the Court erred in holding that, under said contract, the plaintiff was bound to deliver and the defendant bound to accept the entire tonnage called for by said contract in the specified time, but should have construed said contract to mean that the tonnage did not become cumulative, except by mutual consent, and there was no obligation on the part of the defendant to order or the plaintiff to ship the entire tonnage.
"II. Because the Court erred in not holding that the complaint showed on its face that the plaintiff was not damaged by the failure of the defendant to order and accept the entire tonnage, as the contract on which complaint was based, and which was made a part thereof, clearly shows that the plaintiff was not bound to ship only what was ordered by defendant, and the defendant was not bound to accept only what was ordered by it.
"III. Because the Court erred in holding that, under said contract, the defendant would be liable in damages for its failure to take the entire amount of said coal, provided the plaintiff was willing anid ready to ship same, but should have held that, under said contract, the plaintiff had a right to reduce the tonnage for any month to the amount ordered and accepted, and was not liable to defendant for any more, and that, under no circumstances, was the tonnage to be cumulative against either party, except by mutual consent.
"IV. Because the Court erred in holding that the complaint stated facts sufficient to constitute a cause of action, but should have held that the action was based entirely on the contract attached to the complaint as an exhibit and such contract construed, as a whole, shows that the tonnage was not to become cumulative against either party, and that the contract was fully performed when the amount of tonnage was shipped that was actually ordered."
The decision in this case involves the construction of the contract in question.
Certain well-established rules are followed by the Courts in the construction of written contracts. The purpose of all rules-of construction is to ascertain the intention of the parties to the contract, and in ascertaining this intention the whole instrument should be considered .and effect given, if practicable, to every clause and word in it. Smith v. Clinkscales, 102 S. C., 227; 85 S. E., 1064, and Stewart v. Morris, 84 S. C., 148; 65 S. E., 1044.
In 6 R. C. L, 841, quoted with approval in ChatfieldWoods Company v. Harley, 124 S. C., 280; 117 S. E., 539, it is said:
"Where the language of the contract is contradictory, obscure, or ambiguous, or where its meaning is doubtful, so that it is susceptible of two constructions, one of which makes it fair, customary, and such as prudent men would naturally execute, while the other makes it inequitable, unsuual, or such as reasonable men would not enter into, the interpretation which makes a rational and probable agreement must be preferred."
In 6 R. C. L., 837, also quoted with approval in the same case, it is said:
"The subject-matter of the contract and the purpose of its execution are material to the ascertainment of the intention of the parties and the meaning of the terms they use, and, when these are ascertained, they must prevail over the dry words of an agreement."
In Merrill-Ruckgaber Company v. U. S. (49 Ct. Cl., 553, affirmed), 241 U. S., 387; 36 S. Ct., 662; 60 L. Ed., 1058, also quoted with approval in the Chatfield-Woods case, it is said:
"In construing a contract, the Court will ascertain the intention of the parties, and to that end will, as far as possible, ascertain the situation of the parties, as well as the purposes had in view at the time the contract was entered into."
In Fairbanks v. Twin City Supply Company, 170 N. C., 315; 86 S. E., 1051, also quoted with approval in the Chat-field-Woods case, it is said:
"All instruments should receive a sensible and reasonable construction, and not such a one as will lead to absurd consequences or- unjust results."
By its exceptions and argument before this Court, the appellant practically takes the position that, under the- terms of the contract, specifically para graphs 3 and 5 thereof, the plaintiff (seller) is not bound to deliver nor the defendant (buyer) to accept the entire tonnage called for by the contract, and that the contract was fully performed when the amount of tonnage was shipped by the plaintiff that was actually ordered out by the defendant.
We cannot agree with this contention. Paragraph 3 of the contract gives to the seller the right, under certain circumstances, to reduce the total tonnage, but imposes upon it no obligation to make such reduction nor gives to the buyer the right to reduce the tonnage to be delivered and accept under the terms of the contract.
Nor does paragraph 5 of the contract support the appellant's views. Although this paragraph may be somewhat obscure, we think that it is clear enough, when taken with the other provisions of the contract, in accordance with the established rules of construction, for this Court to determine its meaning. It must be construed, of course, in connection with the rest of the instrument. The contract begins by providing for the sale of 2,000 tons of coal of a certain grade at a certain price, to be delivered at a certain rate, and within a certain period. It sets out the terms of payment and gives to the seller the privilege of cancellation, in case accounts for coal already shipped are not paid when due, and limits the liability of the seller as to the tonnage to be delivered in case of strickes accidents, etc. These provisions make it clear that the seller and the buyer had in mind and intended to execute a contract with certain definite provisions. If paragraph 5 has the meaning attributed to it by the appellant, then it practically nulifies the balance of the contract and it is difficult to understand why this contract was ever executed at all. It seems to us that if it had been intended that the seller should actually deliver to the buyer, at the price named, only so much coal as the buyer might order, a much simpler agreement clearly expressing this purpose could and would have been executed.
Under our view of the case, paragraph 5 simply means that any coal due to be shipped, but not shipped, in any one month, would not be cumulative, without the consent of both parties, at any time subsequent to such month and prior to the closing date of the contract period, but shipments thereof could be distributed over the remaining portion of the contract period. This construction appears to us to carry out the intention and to be in accord with the purposes of the parties to1 the contract, as evidenced by an examination of the entire instrument; to make the contract fair and such as prudent, reasonable men would enter into; and to be sensible and reasonable construction, and such as would not lead to absurd consequences or unjust results.
All exceptions are overruled, and the judgment of the Circuit Court is affirmed.
Mr. Justice Watts and Mr. Acting Associate Justice C. J. Ramage concur..
Mr. Justice Cothran dissents.
Mr. Justice Brease disqualified.
Mr. Chief Justice Gary did not participate.