Court Opinion

ID: 3600202
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:46:49.583001+00
Date Added: 2024-06-11T09:20:04.409399
License: Public Domain

The action is for damages for the alleged breach by defendant of a contract to purchase cocoanut oil from plaintiff. The dealings of the parties were through a broker. By cable messages, transatlantic telephone conversations, and correspondence, it was agreed in May, 1937, that plaintiff, a Philippine Islands corporation, should sell, and defendant, whose office is in New York city, should buy, 700 tons of this oil at a price fixed, shipment to be made during June, 1937. There was some dispute as to whether payment should be by a ninety-day draft or a sight draft, but the purchaser finally met the seller's demands in this respect, and furnished a sight draft. It seems to have been the uniform practice in the cocoanut oil trade that the terms of such agreements were negotiated as was done here, then later embodied in a formal written agreement. Looking to the preparation of such a formal writing, the broker cabled plaintiff: "We are familiar with the Cristobal form of contract do you want us to execute and send forward * * *." Plaintiff answered: "Leave you to arrange contract."
The so-called "Cristobal" form of contract, to which we shall refer again, was not used. The broker prepared a form which included this provision: "Seller shall not be responsible for non-delivery or delay in delivery when caused *Page 369 
by partial or total interruption of transportation facilities * * * or from any delay caused by inability to secure freight space * * * and in event of any delay in delivery from any such cause, this contract may at seller's option be extended for a like period equal to such delay." On or about May 14, 1937, defendant signed this agreement in New York city and arranged with a New York bank for the necessary credit to cover the sight draft. About a month later the agreement forwarded by the broker, reached plaintiff in Manila. Plaintiff signed and returned it with a letter informing the broker that the ship Bengalen, on which plaintiff had arranged to ship the oil, had been delayed by a grounding and subsequent dry docking and would not reach Manila until July 5th, so that June shipment was impossible. Parenthetically, the jury apparently found on sufficient evidence that plaintiff made reasonable efforts to procure other shipping space for a June sailing, but without success. Plaintiff through the broker, asked defendant to agree to an extension of time for shipment and to arrange an extension of the letter of credit to cover the delay. Defendant refused, claiming that plaintiff's failure to ship in June was a breach of contract. In the meantime the market price had dropped and plaintiff had to sell the oil to other purchasers at a substantial reduction from the price arranged with defendant.
Plaintiff sued, alleging a breach of the formal contract, which was attached to the complaint. Later plaintiff added a second cause of action for a breach of the agreement as made by the cablegrams and letters which covered price, quantity, shipping time, etc. In this added cause of action plaintiff included an allegation that there existed in the cocoanut oil trade a general usage and custom to the effect that if a seller was unable to make delivery in the stipulated time, for reasons beyond the seller's control, the time for delivery was extended for a period equal to the period of such delay. On the trial, plaintiff sought to prove this custom by the testimony of persons familiar with the cocoanut oil trade. At the close of plaintiff's case, defendant *Page 370 
moved to dismiss both causes of action as not established. The court, with plaintiff's consent, then struck out the first cause of action, on the written contract, but granted plaintiff's motion to amend the remaining cause of action by inserting in this remaining cause of action the allegations of the stricken cause of action as to the making of the formal agreement. As the matter was then left by this ruling, the contract sued upon was the one made out by the cablegrams and letters which had been, as plaintiff's counsel put it, "memorialized by a later instrument." The trial court's ground for holding that the formal written and signed instrument was not the contract between the parties, was that plaintiff, when it signed this paper containing the delay clause, knew that it could not deliver in June. This formal writing, the court said, did have significance, however, as evidence of what the contract was.
The court in his charge told the jury that there were two questions before it: first, was it the known and accepted custom of the trade that there be read into every such contract, an unavoidable delay, or force majeure, clause of the same import as the clause actually found in the written "memorial," and, second, did plaintiff, assuming the existence of such a custom, do everything it was required to do by such a custom. The jury was told that if it answered either question in the negative, plaintiff could not recover. The jury brought in a verdict for plaintiff. The Appellate Division, one justice dissenting, reversed and dismissed the complaint, holding that plaintiff had "failed to establish any uniform force majeure
clause customary in the trade" and that "although some kind of aforce majeure clause appears commonly to have been inserted in contracts for the sale of cocoanut oil, they differed in such important respects in their terms that it cannot be said that parties in the trade contracted with relation to any particularforce majeure clause." (261 App. Div. 886.) This dismissal requires us to examine plaintiff's proofs.
The three experts who testified for plaintiff on this question of custom were in agreement that in such contracts *Page 371 
there was always expressed or implied some provision concerning unavoidable delays. In the testimony of each can be found language to the effect that the shipper when faced with such a delay, is entitled by fixed custom to an extension of time. But the testimony of these same experts, on cross-examination, leaves it at least doubtful whether the testimony of any one of them amounts to a clear statement of the existence in this trade of a custom so general, uniform and unvarying as to furnish a fixed and definite standard by which to ascertain the intention of the parties. (Manhattan Co. v. Morgan, 242 N.Y. 38, 53; FederalReserve Bank v. Malloy, 264 U.S. 160, 170.) The so-called "Cristobal" form of contract which the broker suggested in one of the cablegrams, and which, while not used by the parties, is in the record as defendant's Exhibit D, contains no specific provision for an extension of time to the shipper for unavoidable delays but includes this language on the subject of delay: "Seller not to be responsible for nondelivery or delay in delivery resulting from any contingency beyond its control or its subsidiary company's control." That force majeure clause would seem not to bear out plaintiff's claim of a uniform custom of extending the delivery time, but to mean only that the shipper is not to be held liable for unavoidable delays.
However, while we may doubt the sufficiency of the proof as to an unvarying custom, we find proof that defendant agreed, by signing the formal contract, that as a usual term and condition of such contracts, plaintiff was entitled to an extension of time equal to the period of any unavoidable delay. The broker, before preparing the formal agreement, wrote defendant confirming its purchase, mentioning quantity, price, shipment in June, credit terms, etc., and adding the phrase: "usual terms and conditions." Thereafter the broker submitted to defendant the formal agreement containing the force majeure clause on which plaintiff now relies. The parties here concede that defendant's signature to this form of agreement did not bind it to the agreement, as such, when it later turned out that the *Page 372 
plaintiff in its turn, signed the paper knowing that it could not perform as to a shipment in June. But the written agreement and its force majeure provision is still in the case, at least as a memorial, or written record, of what the parties meant by "usual terms and conditions." It thus amounts to an admission by defendant that the force majeure clause in the writing was one of the "usual terms and conditions" of a shipment of cocoanut oil from the Philippine Islands to the United States, and thus part of the contract between the parties. Being an admission against defendant's interest of a fact favorable to plaintiff, it was evidence to which the jury could give such weight as seemed appropriate. (Cook v. Barr, 44 N.Y. 156, 158; Reed v.McCord, 160 N.Y. 330, 340; Miller v. Silverman, 247 N.Y. 447,450.) The signature of defendant to the memorial, containing the force majeure clause, cannot be regarded as totally without significance. As the trial justice said, in denying defendant's motion to dismiss: "* * * I am very clear on it, that the instrument has only significance as evidence of what the other agreement was." With that writing before it, the jury could say, as it did by its verdict, that the clause was a customary one in the sense that it was one of the "usual terms and conditions," to which the parties had bound themselves informally, and that defendant was guilty of a breach when it refused the extension of time and refused to accept a July shipment.
The judgment of the Appellate Division should be reversed and that of the Trial Term affirmed, with costs in this court and in the Appellate Division.