New York Tartar Co. v. French , 154 Pa. 273 ( 1898 )

Opinion by

Mr. Justice Dean,

This case was tried by the court without a jury under the act of April 22,1874. The material facts, as found by the trial judge, are very clearly stated in his opinion, which we quote:

The plaintiff, a manufacturer of chemicals in the city of New York, and the defendants, a firm dealing in drugs and chemicals, doing business in the city of Philadelphia, entered into three written contracts for the sale by the plaintiff to the defendants of cream of tartar and tartaric acid. The first of these contracts, dated January 11,1889, was a sale of “ 20 casks of their cream tartar crystals f. o. b. New York at 25 cents per pound, cash 30 ds. or 1 p. c. off 10 days, deliverable as wanted within six months from date, and with protection at time of shipment.”

The second contract, dated July 15, 1889, provided for the sale of “ ten (10) casks of their Xtal Cr. Tartar, f. o. b. New York, less 1 p. c. brokerage, at twenty-three (23) cents per pound, cash 30 ds. net, or 1 p. c. cash 10 days. Deliverable during the balance of the year as wanted. Not more than five casks per month, with protection against further decline in price.”

The third contract was in the form of a letter written by the plaintiff and accepted by the defendants, dated November 1, 1889, in which was set forth: “We hereby confirm sale to you of six thousand (6000) pounds tart; acid at 30 c., Xtal B. size at 31 c. pound, 30 ds. net, or less 1 p. c. for payment within 10 ds., f. o. b. New York, 1 p. c. brokerage. All to be taken within three (3) months from above date, and in three monthly installments of equal size. Should our price be lower at the time of any delivery, such delivery to be charged at the reduced price.”

Prior to December 1, 1889, there had been four deliveries under the terms of these contracts. At the request of the defendants these deliveries were made by the plaintiff on board the steamer “ Commonwealth ” in New York. In the case of two of the shipments the plaintiff, at the request of defendants, had procured the goods to be insured by the owners of the “ Commonwealth ” against losses by perils of the sea. In the cases of the other two shipments there was no such request, and the goods were not insured.

On December 4,1889, the plaintiff wrote to the defendants, designating the goods still undelivered and saying: “Please favor us with dates and route of shipment, our December engagements being very heavy.” The defendants replied December 5th as follows: “ Such of the goods as are due us, on which we pay freight, please ship by the last trip that the steamer ‘ Commonwealth ’ makes this month, and insure the same with them, which they will do at 1-8 p. c.”

On December 28th, the plaintiff delivered on board the “ Commonwealth ” eight casks of cream tartar and six barrels of tartaric acid, of the value of $2,762.17, without having secured the insurance as requested by the defendants. The “ Commonwealth ” foundered in the course of the voyage, and the goods were not received by the defendants. The plaintiff wrote to the defendants December 30th, saying: “ Shipped Saturday on steamer ‘ Commonwealth ’ eight casks cream and sixteen bbls. tartaric acid, value $3,800, but on seuding to agents this morning for bills lading with your letter ordering insurance they declined to insure because vessel ashore. Please see what you can do at your end.”

On these facts plaintiff based its right to recover from defendants the contract price of the eight casks of cream tartar and six barrels of tartaric acid, $2,762.17, delivered on board the “ Commonwealth ” December 28, 1889, which by reason of the foundering of the vessel were not received by defendants. Under the settled rule, that a delivery to the common carrier designated by the purchaser is a delivery to him, if nothing further appeared, the plaintiff had a right to recover. But the defendants deny plaintiff’s right to judgment, alleging that the fair construction of the contracts was, that plaintiff was to deliver the goods on board the vessel as ordered, and as the order of December 4,1889, under which this shipment was made, also directed insurance, which plaintiff did not effect, and did not notify defendants of a refusal to insure, therefore there was no delivery under the contract.

The learned judge of the court below who tried the cause, in his ascertainment of the law applicable to the facts, is of opinion that the silence of plaintiff for more than twenty days after the receipt of the order of December the 4th, and the neglect to insure, would, perhaps, in good morals warrant the imposition of the loss on it, and that the rule of the civil law, which is “ in accord with the principles of justice and fairness,” would so decide, if it could be invoked in a common law court by defendants to relieve them from liability. But he holds that, as to insurance, plaintiff was a mere mandatory without compensation, who wholly neglected to comply with the mandate; that in such case the rule of the common law is different from that of the civil law, and however meritorious may be the defence in morals, it is not sufficient in law, and judgment is accordingly entered for plaintiff.

Undoubtedly, the rule of the common law is as stated; a distinction is drawn between the misfeasance and nonfeasance of a mere mandatory, one not owing the duty of performance, and with whom it is wholly gratuitous.

The distinction is, that if such an one undertakes to carry out the order, and does it so negligently that damage results, he is liable; if he do not undertake to carry it out at all, he is not liable. The reason is, that when the mandatory begins to act he gives undeniable evidence that he considers himself bound, and thus may induce the mandant to neglect acting for himself ’; but where he only promises to act, and does not act, there being no consideration, it is a mere nudum pactum, a promise without consideration, which imposes no legal liability.

So far as concerns the distinction, the rule is not always satisfactory, obviously, because, if the reason on which it is founded be made the test of its application, it Avill reach many cases of nonfeasance as well as all cases of misfeasance. The reason for the rule consists wholly of a moral obligation ; that is, he who has misled another to his hurt should make good the loss. Seemingly, therefore, wherever, from the facts, the obligation exists, the mandatory should be held liable; but the common law stops short of this, and declares, the reason for the rule being present in all eases of misfeasance, the rule, shall apply, but not being present in all cases of nonfeasance, it shall not apply to any.

The result has not seldom been efforts on part of courts, when the reason, in a case of nonfeasance, seemed to demand a disregard of the distinction, to apply the rule as if the case were one of misfeasance. Hence, apparently contradictory decisions of courts, and difference of opinion betAveen such eminent law writers as Sir William Jones and Judge Hare. The first, in his Law of Bailments, says that anyone might refuse to accept a commission, but if he agreed to execute it it must be fulfilled, or the person who gave it notified in time to enable him to look for another agent. Judge Harb, in his work oh Contracts, thinks this doctrine is wholly one of the civil law, and has no authority for it in the common law. He adopts to the full extent the rule of the common law as laid down by Chancellor Kent in Thorne v. Deas, 4 Johns. 84, the case cited and relied on by the appellee here. In that case Thorne and another, plaintiffs, owned one half a brig; Deas, the defendant, owned the other half. On the day the vessel sailed from New York for West Indies, Thorne, who was going on board, asked Deas to insure her. Deas promised he would do so at once, but did not do so. Ten days afterwards the other owner, on discovering it, said to Deas if he did not at once take out a policy he would do so himself. Deas told him to make himself easy, that he would insure the vessel that very day. He did not do so, and the vessel was lost. Thorne and his co-owner of the one moiety, brought suit against Deas to recover damages for his neglect. Chancellor Kent, in deciding the case, held that Deas’s neglect was only a case of nonfeasance; that what he promised to do was purely voluntary and gratuitous, and there could be no recovery, and says : “ There is, then, no just reason to infer from the ancient authorities that such a promise as the one before us is good without showing a consideration.” Thorne v. Deas, since the judgment rendered in it, has been cited as ruling this class of cases ; it has come down to us with all the weight of authority attached to the name of the eminent lawyer who promulgated it.

Occasionally doubted, because it is not clear that even the facts of that case show a want of consideration, still the rule has generally been followed by American courts. We are not inclined to dispute it, for, while it majr not wholly commend itself to approval, nevertheless, that stability of the law, which comes from adherence to a settled rule, ought not to be shaken, merely because either conscience or reason, quickened by the hardship of a particular case, suggests a departure. The only question here then is, does Thorne v. Deas rule this case ? The learned judge of the court below thought it did; we are of a different opinion. It is conceded, in that case, as well as in the ancient authorities on which it is grounded, that even at common law a merchant was bound to insure for his correspondent, if, from the course of dealing between them, the one has been used to send orders for insurance and the other to obey them. Assume, that this is a case not strictly within the law merchant, and that there is no custom of merchants affecting the rights and liabilities of the parties ; that it is a case growing out of a contract between the vendor of goods in New York and the purchaser of goods in Philadelphia, and that their rights and liabilities are to be determined wholly by their contract. Then, the case turns on a reasonable interpretation of the contract.

The first contract, January 11, 1889, was for 20 casks of cream tartar, deliverable as wanted within six months- from date. The second contract, July 15, 1889, was for 10 casks, deliverable during balance of year as wanted. The third contract, November 1, 1889, was for 6000 pounds, all to be taken within three months from date and in three monthly installments. In each sale the price was f. o. b., that is, free on board, a trade term as fixed in its signification as the C. O. D., with which most persons are familiar. The first two contracts expressly provide that deliveries are to be made as wanted by the purchasers. The third one stipulates the 6000 pounds are to be taken within three months in three monthly installments of equal size; this, of course, was 2000 pounds monthly, but date of shipment within each month to be designated by purchaser. From the extreme brevity of these contracts, certain things not in them yet within the contemplation of the parties, necessarily, were to form the subject of future decision. The mode of shipment, whether by water or railroad, was not named; nothing was said about insurance, if by water. The subsequent correspondence shows, it was understood the purchasers were to designate the mode of carriage as well as the earner. Do the contracts themselves and the subsequent conduct of the parties warrant the inference that the consignor was bound to insure the shipment of the 28th of December, not received because of foundering of vessel ? The court below says: “ The two occasions upon which the plaintiff complied with the request of the defendants to have the goods insured, taken in connection with the two occasions in which they were sent without insurance, are insufficient to establish such a course of dealing between the parties as would make it obligatory upon the plaintiff to provide for having the goods insured.” To our minds the inference from all the facts is the other way.

The point of shipment was New York; the defendants under the contract designated not only the quantity of goods shipped from time to time, but also that they were to be carried by water, by what vessel and the voyage. The course of dealing between the parties warrants, undeni ably,‘that plaintiff was bound to do just what it did do in these particulars. As to course of dealing with reference to insurance, in order for shipment July 18th, they say, “ insure,” and plaintiff did insure. In order of August 17th, they say nothing about insurance, and plaintiffs did not insure. In order of November 12th, they say “ insure,” and plaintiff did insure. Then comes the order of December 5th, saying “ insure,” and plaintiff in twenty days thereafter made the shipment, but did not insure, and did not notify defendants that they would not do so, but did notify them of an ineffectual attempt to obey the order when too late. The course of dealing here shows that plaintiff was to insure whenever ordered by defendants, and was not to insure unless ordered.

This inference is not a custom of merchants reading into a contract a trade obligation, but the interpretation of -this contract, which the parties themselves by their conduct put upon it. The very fact that plaintiff did not insure the order of the 17th of August, instead of showing the absence of obligation on the order in dispute, shows the reverse; for that order did not direct insurance, therefore none was taken; if plaintiff had disregarded either the order of July 18th, to insure, or that of November 12th, to same effect, that would have been a fact of some significance, as tending to show, effecting insurance was wholly gratuitous-on its part.

Nor is there anything in the evidence subsequent to the loss, which tends to rebut this inference. In plaintiff’s telegram of the 80th of December, they say the agents declined to insure because “ vessel ashore. Please see what you can do at your end.” It is somewhat difficult to understand just what plaintiff expected in way of honest insurance at this “ end, ” with the vessel ashore at that “ end.” The defendants, too, in their reply do not seem to have thought it incapable of accomplishment because of the fact that the vessel was already wrecked, but because it was known to be ; for they say as it “ was published in our papers this morning, it was too late for us to do anything here.” But whatever reflections this correspondence may cause as to the course of dealing between merchants and underwriters, it shows that, up to the wreck of the vessel, plaintiff acted as if bound to insure according to the order.

Thorne v. Deas did not turn upon the interpretation of a contract between the vendor and purchaser of goods to be shipped as “ wanted.” It was the promise of one owner of part of a vessel to his co-owners to have her insured; and it was held there could be no recovery because the promise was wholly without consideration. Here, insurance when ordered, under the interpretation put by the parties upon their contract, was as binding as any other part of it, and there is an adequate consideration. Frauenthal v. Derr, 13 W. N. 485, also cited by appellee, was between a property owner and a fire insurance agent; it was a simple neglected promise on part of agent to renew insurance for the house owner; there was no consideration. On the undisputed facts it was declared to be only a ease of nonfeasance and that there could be no recovery.

Counsel for appellant “ merely ask that defendants be not made to pay for that which they never received.” We decide, they ought not to pay the $2,762.17, value of goods shipped December 28, 1889, on board the “ Commonwealth.” But there is due plaintiff from defendants a balance of $509.81 for goods sold and delivered in January, 1890. For this they ought to recover. Therefore the judgment of the court below is reversed, and it is ordered that judgment for plaintiff for sum of $509.81, with interest from January 20, 1890, be entered.