Court Opinion

ID: 1547021
Source: CourtListenerOpinion
Date Created: 2013-10-30 06:41:01.523267+00
Date Added: 2024-06-11T18:12:29.111875
License: Public Domain

13 F.2d 999 (1926)
WESSEL et al.
v.
SEMINOLE PHOSPHATE CO.
No. 2428.
Circuit Court of Appeals, Fourth Circuit.
June 8, 1926.
*1000 *1001 *1002 Edward R. Baird, Jr., of Norfolk, Va. (Baird, White & Lanning, of Norfolk, Va., H. G. Connor, Jr., of Wilson, N. C., and R. Clarence Dozier, of Norfolk, Va., on the brief), for plaintiffs in error.
Kenneth C. Royall, of Goldsboro, N. C., for defendant in error.
Before WADDILL, ROSE, and PARKER, Circuit Judges.
PARKER, Circuit Judge (after stating the facts as above).
The plaintiffs contend that the District Judge erred in holding that their action in failing to ship the nitrate when requested upon 30 days' terms amounted to a cancellation of the contract. Defendant contends that this holding was correct, as the exclusive remedy of the plaintiffs, upon refusal of defendant to pay in advance or furnish satisfactory security, was to cancel the contract. As additional grounds for sustaining the judgment of the court, the defendant contends that the contract sued on was void for lack of mutuality and that there was no finding by the court of a breach on the part of defendant.
We think that the learned District Judge erred in holding that the mere failure on the part of plaintiffs to ship the nitrate on 30 days' terms amounted to a cancellation of the contract. If it were true, as contended by defendant, that the exclusive remedy of plaintiffs, in case of defendant's failure to pay in advance or furnish satisfactory security, was to cancel the contract, then defendant would be justified in treating a failure to ship on terms after a demand for cash in advance as such cancellation. But, as we interpret the contract, cancellation was not the exclusive remedy of plaintiffs in such case.
In the absence of contrary provision in a contract of sale, it is the duty of the buyer to pay cash on delivery. Inner Shoe Tire Co. v. Treadway (C. C. A. 5th) 286 F. 838. It was provided in the body of this contract that payment should be made 30 days from average date of delivery, but upon the margin was printed the condition that, if the financial responsibility of the buyer should become impaired or unsatisfactory to sellers, they should have the right to require payment in advance or satisfactory security. The effect of this provision was merely to preserve to the sellers the right to demand, as a condition of performance on their part, what they would have had a right to demand at law, in the absence of the 30 day provision. In other words, the effect of the condition in the margin was to confer upon the sellers the right to eliminate the provision as to the 30 days' terms, if the credit of buyer should become impaired. Immediately after the sentence in the margin setting forth this condition, there followed another sentence providing that, if the buyer should fail to comply with the terms of payment, or any other terms of sale, sellers should have the right to cancel unfilled portions of the contract, buyer remaining liable for unpaid accounts. It is argued in behalf of defendant that this sentence prescribes the exclusive remedy of the seller upon the buyer's failure to pay cash in advance or provide security, but we do not so interpret it. The right to cancel is given, not upon failure to pay cash or furnish security, but upon failure "to comply with terms of payment," which, in case payment in advance is not demanded on account of impaired credit, would mean failure to pay within 30 days of the average date of delivery of any lot of nitrate delivered under the contract. The right to cancel was also given by the provision in question upon failure of buyer to comply with any other term of the contract, which clearly indicates that it was not the intention of the parties that the right of cancellation should be limited to the breach of conditions contained in the preceding sentence, and certainly not that it should furnish the sole remedy of the sellers upon such breach.
To give the language the interpretation contended for by defendant would lead to the absurd result that upon the buyer's credit becoming impaired coincident with a decline in the market, the sellers would be faced with the alternative of shipping the nitrate on 30 days' time and taking the risk of loss through failure of the buyer, or of canceling the contract and taking the loss resulting from the decline in the market. Certainly no such result was contemplated by the parties. The obvious purpose of the sentences printed on *1003 the margin was to provide additional and independent safeguards for the sellers: First, the right to demand cash or security upon the buyer's credit becoming impaired; and, second, the right to cancel upon the buyer's failure to comply with payment or any other term of the contract. It was clearly not their purpose to diminish the safeguards of the seller, or to provide that he must cancel and accept the loss due to decline in the market, if unwilling to extend terms because of the impairment of buyer's credit. Such an interpretation would virtually give to the buyer the option of canceling the contract upon the impairment of his own credit.
Since, therefore, cancellation was not the exclusive remedy of plaintiffs, their failure to make shipments on 30 days' terms could not, of itself, be construed as a cancellation of the contract, and the court erred in so holding.
This brings us to the second point relied on by defendant, viz., that the contract was void for lack of mutuality, and that the judgment in favor of defendant ought to be upheld on that account, whatever be the holding as to cancellation. This point cannot be sustained. There was a definite agreement on the part of plaintiffs to sell, and on the part of defendant to purchase, a certain quantity of nitrate of soda at a fixed price. The only ground of the contention of lack of mutuality is that the contract, which provided for importation from South America, contained the clause "no arrival no sale," and allowed cancellation at option of sellers if vessels should be lost, damaged, commandeered, diverted by government order, seized, captured, or delayed. The clause, "no arrival no sale" has a well-understood meaning, viz., that, if the goods do not arrive at destination, the buyer acquires no property in them and does not become liable to the sellers for the price. Harrison v. Fortlage, 161 U. S. 57, 16 S. Ct. 488, 40 L. Ed. 616; Moore v. W. R. Grace & Co. (C. C. A. 4th) 287 F. 103. The provision allowing cancellation by the sellers if vessels should be lost, damaged, etc., was clearly intended to apply to losses and delays beyond the control of sellers; and it is settled that such a provision does not render the contract void for lack of mutuality. Peck v. Stafford Flour Mills Co. (C. C. A. 8th) 289 F. 43; W. H. Goff Co. v. Lamborn & Co. (C. C. A. 5th) 281 F. 613.
This brings us to the third and last point upon which defendant relies, that there is no finding that the defendant breached the contract sued on. We agree with defendant that there is no finding of breach of contract on its part; but we do not agree that this is sufficient to sustain the judgment in its favor. The court found certain evidentiary facts and concluded from these that there was a cancellation of the contract on the part of plaintiffs by failure to ship on 30 days' terms. As we have seen, this conclusion was erroneous as a matter of law. The court did not attempt to pass upon the question as to which party breached the contract, assuming that it was not canceled by failure to ship on 30 days' terms, nor as to whether there was a rescission by mutual consent; and the facts found are not sufficient for the determination of these matters. It is found that the defendant did not furnish security and took the position that plaintiffs had canceled the contract; but it is not found that plaintiffs offered or were ready and willing to perform the contract on their part, or that defendant refused to pay cash or furnish security or accept delivery under the contract. It is found that, when plaintiffs wired defendants that they were instructing their agents to ship 25 tons and to draw against bills of lading, defendant merely protested that this was not in accordance with terms of contract, but not that defendant refused to accept the goods or honor the draft. It is found that plaintiffs telegraphed in reply to this protest calling attention to their right to demand cash or security in advance, stating that they must have cash or satisfactory security and requesting advice of defendant, but this telegram does not show that plaintiffs demanded that defendant accept delivery under the contract. The plaintiffs state in their reply brief that thereafter "nothing further was done by either party." These findings relate to evidentiary matters and not the ultimate facts. Before it can be determined whether defendant did or did not breach the contract, it must be ascertained whether plaintiffs were ready, able, and willing to perform the contract on their part and tendered performance thereunder, or whether, plaintiffs being ready, able, and willing to perform, defendant refused to accept performance and thereby waived tender on the part of plaintiffs and breached the contract on its part, or whether there was a rescission of the contract by mutual consent. Florence Mining Co. v. Brown, 124 U. S. 385, 8 S. Ct. 531, 31 L. Ed. 424. These are the ultimate facts upon which the case turns, and there has been no sufficient finding with respect to them to justify the court in declaring as a matter of law that there has or has not been a breach or a rescission by mutual consent. Special findings by the trial judge in an action at law, where a jury trial has been waived pursuant to statute, have the same effect *1004 as a special verdict of a jury, and must embrace a finding on every material issue joined in the case. Where the ultimate facts in issue are not covered by the findings, this court cannot supply them from evidentiary matters found, but must remand the cause for a new trial. Suydam v. Williamson, 61 U. S. (20 How.) 427, 441, 15 L. Ed. 978; Towle v. First Nat. Bank of Boston (C. C. A. 8th) 153 F. 566, 82 C. C. A. 520; Evans v. Kister (C. C. A. 6th) 92 F. 828, 35 C. C. A. 28; Packer v. Whittier (C. C. A. 1st) 91 F. 511, 33 C. C. A. 658.
For the error stated, the judgment of the District Court is reversed, and the cause is remanded for a new trial.
Reversed.