Hinckley v. Pittsburgh Bessemer Steel Company

[ This is an action at law, brought in the circuit court of the United States for the Northern district of Illinois, by the Pittsburgh Bessemer Steel Company, Limited, a Pennsylvania corporation, against Francis E. Hinckley, to recover damages for the breach by Hinckley of a written contract for the purchase by him from the company of 6,000 tons of steel rails. The contract was as follows:

'MEMORANDUM OF SALE.

'The Pittsburgh Bessemer Steel Company, Limited, have sold     and hereby agree to make and deliver to the order of F. E.      Hinckley, Esq., 204 Dearborn St., Chicago, Ills., and the      said Hinckley has purchased and agrees to pay for, six      thousand gross tons of first-quality steel rails, to weigh      fifty-two (52) pounds to the yard, and to be rolled true and      smooth to the pattern to be furnished by the said Pittsburgh      Bessemer Steel Company, Limited, pattern No. 5. Said rails      are to be made of the best quality of Bessemer steel, and to      be subject to inspection as made and shipped,a nd to be well      straightened and free from flaws, and to be drilled as may be      directed. At least ninety per cent. shall be in thirty (30)     feet lengths, with not over ten (10) per cent. of shorter     lengths, diminishing by one foot differences, none to be less      than twenty-four (24) feet. All second-quality rails, or     excess of shorts which may be made, not exceeding five (5)      per cent. of each month's shipments, to be taken at the usual     reduction of ten (10) per cent. in price, and to be piled and     shipped separately, (pained white on both ends,) as may be      ordered by the inspector. Deliveries to begin in May, 1882,     in which month one thousand tons shall be delivered, and to continue at the rate      of twenty-five hundred tons per month after July 1, 1882. until finished, strikes and accidents beyond ordinary control     of said steel company, and acts of Providence, preventing or      suspending deliveries, alone excepted, in which case      deliveries are to be delayed for a corresponding length of      time only. Price to be fifty-eight dollars net, per ton of     2,240 pounds of finished steel rails, ex. ship or f. o. b.      cars at Chicago, Ills., seller's option. Terms of payment,     cash on delivery of inspector's certificate for each five      hundred tons as fast as delivered. If shipment is delayed     without fault of said steel company, payment is to be made in      cash upon completion and delivery of each five hundred tons      at Chicago and inspector's certificate. Rails to be inspected     at mill as fast as completed and ready for shipment.

'In witness whereof the said Hinckley has hereto set his hand     and seal, and the Pittsburgh Bessemer Steel Company, Limited,      by its duly authorized officers, hath signed and affixed its      corporate seal, the day and year aforesaid.

'It is further agreed that the Pittsburgh Bessemer Steel     Company, Limited, are not to be responsible for delays      resulting from failure of railroads to furnish cars, proper      efforts having been made to procure them, nor for detentions      after shipment has been made. It is understood that the     purchaser shall have the right to make one-half of the order      fifty-six (56) pounds per yard, pattern No. 4 of said steel      company, notice to be given thirty days before the time for      the delivery of the rails.

'Chicago, Ills., February 18, 1882.

F. E. HINCKLEY.

'C. H. ODELL, Broker.'

One copy of the contract was signed by Hinckley, and a duplicate of it was signed by the company. The defendant pleaded the general issue, and the case was tried by the court on the due waiver of a jury. The court made the following special finding of facts: '(1) That the written agreement set out and described in the declaration was duly executed by the plaintiff and defendant in said cause, as alleged in said declaration.

'(2) That immediately after the making of said contract, and before the time to begin the execution thereof, the plaintiff purchased the requisite amount of material from which to manufacture the six thousand tons of steel rails called for by said contract, and that, after the purchase of said supplies by plaintiff, there was a decline in the value thereof, before the time for the delivery of any portion of said rails, and that lower prices for such supplies ruled during the months of May, June, July, and August, 1882.

'(3) That it appears from the parol proof heard on said trial, aside from the provision in said written contract in regard to drilling directions, that it was usual and customary for the purchaser of steel rails to give directions as to the drilling thereof, and that each railroad company has its own special rules for drilling, and the drilling of such rails is considered in the trade as a part of the work of manufacture, and a part of the duty of the manufacturer in order to fully complete the rails for use.

'(4) That, by letters dated April 3d, April 20th, April 26th, and April 28th, from plaintiff's agents to defendant, and which letters were duly received by defendant before May, 1882, defendant was requet ed to furnish drilling directions for the rails to be delivered in May, under said contract, and defendant not only neglected to comply with such request and furnish such directions, but defendant also notified plaintiff, in reply to such request, that he, defendant, was not then prepared to receive the rails which were to be delivered under said contract in the month of May. Again, about the fifteenth of June, defendant informed plaintiff that he was becoming discouraged about being able to take the rails. That, about June 23d, plaintiff notified defendant that it was ready to commence rolling the rails for the July deliveries, as well as to cover the thousand tons specified in the contract for delivery in May, of which plaintiff had postponed delivery at defendant's request, and asked for drilling directions from the defendant; but defendant wholly neglected to give such drilling directions. That about the twenty-sixth of July, defendant, in substance, informed plaintiff's agents that his financial arrangements for money to pay for said rails, pursuant to said contract, had failed, and that he could not take said rails unless plaintiff would sell them to him on six and twelve months' credit, for which the notes of the railroad company for which defendant was acting would be given, which defendant would indorse, and also further secure with first-mortgage bonds, as collateral, at fifty cents on the dollar, but, unless he could secure the rails on such terms, he could not take them, and that plaintiff declined to accept said proposition for the purchase of said rails on credit; and I further find that, on the thirtieth of August, 1882, plaintiff notified defendant that the time for the completion of his contract for the purchase of said rails had expired, and requested defendant to advise it whether he would accept the rails or not. To this request defendant made no reply.

'I further find that, while plaintiff did not expressly agree with defendant to postpone the time for the delivery of the rails to be made and delivered under said contract, yet plaintiff did in fact delay the rolling and delivery of the rails to be delivered in May, and that, by reason of the repeated statements of defendant that he was not ready to give drilling directions, not ready to use said rails, and not ready to accept them, plaintiff did postpone rolling said rails, and in fact never rolled any rails to be delivered on said contract, but that plaintiff was at all times during the months of May, July, and August ready and able, in all respects, to fulfill said contract and make said rails, and the same would have been ready for delivery, as called for by said contract, if defendant had furnished drilling directions, and had not stated to plaintiff's agents that he was not ready to furnish said drilling directions, and not ready to accept said rails. I further find that on or about the fifteenth day of September, 1882, defendant was formally requested to furnish drilling directions and to accept said rails, and that he replied to such request that he should decline to take any rails under said contract, and that he had made arrangements to purchase rails of others at a good deal lower price. I therefore find, from the testimony in this case, that defendant, by requesting plaintiff to postpone the delivery of said rails, and by notifying the plaintiff that he was not ready to accept and pay for said rails, excused the plaintiff from the actual manufacture of said rails and a tender thereof to defendant. And I further find that defendant's statement to plaintiff, on the twenty-sixth of July, that he could not pay cash for said rails, as called for by the contract, and that we wished to buy them on credit, was in fact a notice that he would not be able to pay for said rails if rolled and tendered to him by plaintiff. I therefore conclude, and so find as a matter of fact, from the evidence in the case, that said plaintiff in apt time requested defendant to furnish directions o r the drilling of said rails, and that defendant neglected and refused to do so, and that, although plaintiff was ready and able to fully perform said contract, and make and deliver said rails to defendant as required by said contract, defendant refused to accept and pay for said rails.

'(5) That plaintiff manufactured and sold to other persons 4,000 tons of steel rails, from the materials so purchased, with which to perform said contract with defendant, for which said rails plaintiff received $54.60 per ton, delivered at a port on Lake Huron, and that plaintiff made a profit of $1.60 per ton on said 4,000 tons; that, by reason of defendant's refusal to accept said rails, the plaintiff had no employment for its mill for a time, and was obliged to stop its mill for about three weeks in the month of August, 1882.

'(6) That it would have cost plaintiff $50 per ton to have manufactured and delivered the rails called for by said contract to defendant, according to the terms of said contract; so that plaintiff's profits, if it had not been prevented from fulfilling said contract by the conduct of defendant, would have been $8 per ton on each ton or rails called for by said contract. And, because of said facts, I find that defendant was guilty of a breach of said contract, and that plaintiff hath sustained damage, by reason of such breach, in the sum of $42,400.'

On these findings, a judgment was entered for the plaintiff for $42,400 damages, and for costs. 17 Fed. Rep. 584. To review that judgment the defendant has brought this writ of error. After the record was filed in this court, it being discovered that there was an error in computation in entering the judgment for $42,400, instead of $41,600, the circuit court allowed the plaintiff to remit the difference, $800, and an order was entered accordingly, as of the date of the judgment.

''Thos. S. McClelland'', for plaintiff in error.

[Argument of Counsel from pages 270-272 intentionally omitted]

John N. Jewett, for defendant in error.

BLATCHFORD, J.