Court Opinion

ID: 8817156
Source: CourtListenerOpinion
Date Created: 2022-11-26 15:22:20.989434+00
Date Added: 2024-06-11T17:04:30.744393
License: Public Domain

BUFFINGTON; Circuit Judge
(dissenting). In my judgment, the application to the great coke trade of Pennsylvania of the principle now announced in this case would be, as in the present judgment, to hold that a coke broker’s agent who sells for future delivery cannot, during the car shortage periods of the running of the contract, buy any spot coke save at the peril of thereby becoming liable for the difference between the price of such spot coke and the contract price. The grave consequence of such a holding constrains me to respectfully record this dissent.
The present suit was brought by the McKeefrey Iron Company against the Producers’ Coke Company, to recover damages for failure to furnish coke on a number of written contracts. Sales of Connellsville coke by coke manufacturing companies to consuming furnace companies are made on written forms of contract such as were used by the parties in this case. That usual form of contract, as will he seen by examination of its entire contents, contemplates that either the manufacturing coke company may be unable to furnish the coke by causes beyond its control, such as strikes, accidents, etc., or that the furnace company may be unable to use the coke by reason of such similar troubles arising in its furnace operation. Therefore, to avoid these impossibilities of shipment from the coke ovens ánd acceptance at the furnace, the parties provide for the suspension of shipments as noted in the next to the last clause of the contract. In such contract it is moreover recognized that there may be a shortage of railroad cars, and for that car shortage the succeeding clause of the contract provides. It will he understood, of course, that in the usual course of business the coke producer will have other orders from other furnace men, which will cover the entire production of his plant, and in the case of car shortage he equitably prorates his cars among all his orders. This general form of contract is in common use in the coke regions, and the rights and liabilities of the parties were judicially determined many years ago by this court in McKeefrey v. Connellsville Coke & Iron Co., 56 Fed. 212, 5 C. C. A. 482, and have been since acted upon by the trade generally. If the present form of contract were hetween a coke manufacturer and a furnace company, it could be easily adjusted, but in the present case the form of contract suitable between manufacturer and consumer was used by one who was not a manufacturer, but a mere seller, of coke, and the result is the use of terms which were meant to apply to a different situation. But the terms, whatever they are, are in the contract, and it is the province of the law to construe and apply those terms to a contract made by a seller and not by a producer of coke; and in the final analysis the whole cáse turns on the construction and practical application of the last clause of the contract, viz.:
“It is understood and agreed that if there should be a shortage of cars, shipments shall be divided from time to time in fair proportion on all orders”
—words easily applicable in case of a manufacturer selling the product of his own plant, but not clear when the seller is not a coke producer.
*32With the view, therefore, of reasonably ascertaining the true construction of this contract, we look at two things: First, the contract in its entirety, for no contract can be proparly construed, save in its entirety; and, second, the situation and surroundings of the parties when they contracted.
Now, taking the contract as a whole and in its entirety, it is an absolute agreement for the sale of a quantity of coke at a fixed price and at fixed times, and, so far as the present suit is concerned, the absolute character of that undertaking is modified- and affected only by the provision as to car shortage, which I have quoted. The material is standard Connellsville furnace coke. The quantity is a certain aggregate per month for five consecutive months; the rate of shipment is approximately equal daily shipments, and each month’s delivery to be considered as a separate and independent contract. Taking, therefore, say the month of August, 1916, by way of illustration : This contract absolutely bound the seller to ship from 8,000 to 9,000 tons per month during that month, in approximately .daily shipments. To make those shipments, it was the duty of the seller to provide cars and deliver the coke f. o. b. in such cars, and in case there was no shortage of cars he was bound to make such deliveries on each day of the month. In case he failed to make such deliveries, he would, of course, be bound for the difference between the contract and the market price for any shortage.
But how about his obligations where there was a shortage of cars? This brings us to the working situation under which this contract was made and had to he fulfilled. Standard Connellsville furnace coke is a well-known subject of sale. It is produced in a limited region, and three great railroad systems furnish the cars and are the gates through which this great traffic of thousands of cars daily passes. The furnishing of coke cars for this great trade is under the joint control of these railroads. Requests for cars are made upon the railroads in advance, and such aggregate requests are tabulated and known. The capacity of the railroads to furnish those cars for each ■ day is also tabulated and known. Hence the relative proportion of cars the railroad can furnish, with relation to the requirements of the region, is well known, and the daily proportion of shortage on the part of the railroads relatively is ascertained certainly. The proportion of car shortage, therefore, being ascertained, how is this provision of the contract, which provides that, “if there should be a shortage of cars,” to be applied? How shall, in the words of that provision, the shipments under the contract “be divided from time to time, in fair proportion on all orders”? In other words, what did these men mean when they made this contract? Now, it seems to me that these words simply meant what they said, namely, that where a shortage of cars occurred, and only a proportionate amount of cars could be obtained by any one who wanted to ship coke, he should only be held responsible for the coke which he could ship on such proportionate amount of cars, and that for that part of the shipment for which he could not gci cars lie was not to be held. ■
*33This seems to me the plain, simple thing these business men meant when they used these words, and I am buttressed in that conviction by the fact that to give this simple business meaning to these words makes a rational, workable, and readily adjustable means of settling liability under this contract. For example: On the 1st day of August, it was the duty of the seller to ship approximately 300 tons of coke. Whether it had the coke itself, whether it had it under contract with others, or whether it was compelled to go out in the open market and buy it, made no difference, and its then holding or not holding a supply of coke in no way lessened, increased, or affected its general liability to ship the coke it had agreed to ship. It had sold 300 ions of coke for delivery that day, and it was bound to deliver it at the contract price, if there was no car shortage. But if there was a car shortage, then it was only bound, in my judgment, to deliver the proportionate amount of that 300 tons for which the railroads could furnish cars to the region. Suppose that regional car shortage were 50 per cents, then its obligation was to deliver 150 tons of coke, and if it failed to do so on that day the buyer could go out and purchase coke at the market price, no matter what it was, and charge it with the price of that 150 tons, or with as much of it as it failed to deliver. As to the other 150 loirs, which under the contract it would have been bound to deliver in case there had been no cai’ shortage, the car shortage clause excused it, and rightly and fairly excused it, from delivering, for so the contract had provided.
In this way it will be seen that there is a workable basis — practical, simple, easily adjustable — by which the rights and liabilities of these parties could at once be determined by each party, in case of car shortage. The quantum of the daily order and the quantum of car supply were the two elements alone which the parties by their written contract made decisive of their rights. Such being, in my judgment, the true construction of this contract, all questions of other orders, other obligations, other purchases and sales of coke by the seller, are eliminated from this controversy. The contract, as I have said, contemplated an unqualified delivery of a certain quantity of coke each day of the month, at a certain price, and the only thing that excused delivery, but which in fact did excuse delivery when it existed, was the anticipated car shortage. Such being the case, it will be apparent that such elements as the seller having numerous other contracts, as the seller protecting itself against this contract by contracts with coke producers, have no bearing on the determination of the rights of these two contracting parties.
If the Producers’ Coke Company had purchased large quantities of coke to fulfill this contract, that did not increase, lessen, or affect its liability. It had contracted to ship coke at certain times, and shipment alone could fulfill the contract. If it purchased no coke to enable it .to meet its contract, and was willing- to run the risk of 1hc market in buying coke to supply the daily calls of the contract as the need arose, that was a matter of prudence or speculation on the sellers’ part; but it could not affect his contract duty to ship on certain days. Moreover, I am justified in saying that this contract was not *34intended to prevent the seller of coke from making other purchases and sales of coke, for it nowhere says so. In the absence of such stipulation, it is unreasonable to hold that by business implication this contract meant that a broker or seller of coke could only engage^ in buying and selling in his business at the peril of thereby subjecting all his business operations to the domination of this contract. In that connection, it will be noted that, in the practice of the coke regions, some owners of coke ovens contract in advance for the sale of all their supply. Other oven owners refuse to contract in advance for the sale of their whole product, and prefer to sell their product from day to day. Still others make time contracts for part of their output, and leave the other part unsold, so that they can take advantage of any rise in the market.
These practices among coke oven owners lead to there always being for sale and practically immediate shipment or delivery what is Called “spot” coke. The existence of this spot coke in no way affects car supply, for the owner of the coke oven, whether he has solduon time contracts or has kept his product unsold, is entitled to call on the railroad for cars to the capacity of his mine, and on such capacity he is entitled to get a proportion of cars in times of car shortage. Seeing, then, that the existence of spot coke on the market and on the cars for immediate delivery are legitimate conditions in the trade, and that such deálings in spot coke on the part of the brokers and coke sellers is not only legitimate, but affords a means of furnishing, for immediate delivery, to manufacturers whose calls are imperative and whose ’ furnaces might be jeopardized by car shortage; it will be seen that dealing in spot coke in and of itself affords no evidence of any unfairness. It therefore seems to me that the element of the existence of spot coke on the market, and the purchase and sale of such spot coke by the Producers’ Company during the time of the running of this contract, in no way lessened, increased, or affected its liability under this contract, and yet such was its effect under the' ruling of the court in the heavy damages imposed by the verdict in this case.
"Turning back to the provisions of this contract under discussion: If there was no shortage of cars, this contract construed in its entirety, as it must be, obligated the Producers’ Company to ship 300 tons each day, thro ugh August. If there was a car shortage any day, as in fact there was, it was only hound to furnish such proportion of the 300 tons as was proportionate to the available cars which the railroads could furnish to reach it. It seems to me that this method of construing the contract is the only practical,' workable, and reasonable way of applying the language of this exception to the situation which both parties have created, and which both meant should be effected by its terms, and if this view were adopted I feel it would result in as much business certainty in the adjustment of coke contracts between sellers and buyers of coke as the former decision of this court (56 Fed. 212) made a workable path in cases of sales of coke by coke oven owners, under which case, in spite of the vast magni*35tnde of the coke business, disputes over such contracts have practically been eliminated from this court in the last 20 years.
These considerations lead me to respectfully record my dissent in the present case.