Ward v. McKinley , 97 Or. 45 ( 1920 )

McBRIDE, C. J.

1, 2. There is but one question raised on this appeal: Is the contract pleaded in defendants’ answer unilateral? If it is, the judgment of the Circuit Court must be affirmed. If not, there must be a reversal. If plaintiff is so bound by the contract, to order and receive the minimum amount of lumber therein provided for, the defendants would have a remedy against him for damages for failure to order such amount, in which event there is no want of mutuality. This is the test. If plaintiff is not so bound, the agreement does not rise beyond the dignity of a mere option to purchase from the failure to exercise which no canse of action will arise. It is a well-established rnle of law that courts should incline, .where snch a construction is reasonable, to construe a contract in favor of mutuality: Minnesota Lbr. Co. v. Whitebreast Goal Co., 160 Ill. 85 (43 N. E. 774, 31 L. R. A. 529); Dreiske v. Davis Colliery Co., 156 Ill. App. 291; Rice v. Miner, 151 N. Y. Supp. 983 (89 Misc. Rep. 395).

In the case first above cited, the court said:

. “Contracts should be construed in the light of the circumstances surrounding the parties, and of the objects which they evidently had in view. The circumstances, which both parties had in view at the time of making the contract may be referred to for the purpose of determining the meaning of doubtful expressions. Courts will seek to discover and give effect to the intention of the parties, so that performance of the contract may be enforced according to the sense in which they mutually understood it at the time it was made; and greater regard is to be had to their clear intent than to any particular words which they may have used to express it.”

The doctrine is well stated in the above excerpt. Courts naturally are reluctant in cases like the present, where parties have deliberately prepared a long and formal contract, with many elaborate provisions, and have gone through the ceremony of signing and sealing it, to say that in spite of all this preparation and careful execution, they are not bound and that no contract has been in fact executed.

If the plaintiff was anything but a schemer and a dishonest man, he intended when he signed his contract that the defendants should understand that he was binding himself to take all the output of their mill, with the exception therein specified, at the prices agreed upon; and the defendants would not, if they were not lunatics, have signed except with that understanding. It is inconceivable that they would have tied up practically the entire output of their mills for a term of years and agreed to sell to no one but plaintiff, except with the understanding that he was to take that output.

At this stage of the case, in the absence of testimony to the contrary, we are bound to assume that plaintiff was ready 'and willing to perform every stipulation required of him, and that there has been no default in fact upon his part; that he had ordered, received and paid for 628,231 feet of lumber, and was ready and willing to seasonably order, receive and pay for the remainder, according to contract, and that defendants, om the pretext that the contract was not binding upon their part, refused to furnish him with any more lumber.

3. It is idle to say, and counsel does not seriously contend, that there was no consideration passing to plaintiff. The agreement to hold the entire output subject to plaintiff’s orders and not to sell it to other parties, was itself a sufficient consideration.

¥e have before us, then, an agreement of the defendants, based upon a sufficient consideration, to sell and deliver to the plaintiff all the output of their min for the period therein specified, to the exclusion of other parties. We will now proceed to construe the agreement as a whole, “taking it by its four corners,” to ascertain if its true meaning and intent was to bind plaintiff to take and pay for that entire output, or whether it was intended to give bim an option to take or refuse to take it — an option, if he saw fit to do so, to neglect to order a single foot of lumber and to compel defendants to manufacture and pile it in their yard and allow it to .rot there at their own expense and without remedy. That such a condition was ever within the contemplation of the parties, when they prepared and executed the elaborate agreement involved in this suit, is not thinkable. If plaintiff is not bound to take what he bound the defendants to sell to him, it must be due to some mistake or deception in the preparation of the instrument, and we are not prepared to say that such is the case.

The contract, by its terms, is an agreement for a present sale and future delivery of lumber. The stipulation is:

“In consideration of one dollar * * paid by the party of the second part to the parties of the first part * * the parties of the first part hereby agreed to'sell and do hereby sell and agree to deliver,” etc.

The defendants further agree that they “will saw, manufacture, and deliver unto the party of the second part” (plaintiff) “at least four million (4,000,000) feet board measure for each sawing season, * * which said party of the second part agrees to pay for, according to the terms and conditions hereinafter set forth.” These stipulations constitute the framework of the contract. It is an agreement to sell and deliver not less than ten million (10,000,000) feet of lumber on the one band, and an agreement to pay for the lumber só delivered on the other. The manner of delivery and payment are matters of detail.

As to the manner of delivery, it is stipulated that it shall be delivered “f. o. b. cars at Bend, Oregon, at such times, in such manner and in such quantities as the party of the second part may from time to time direct.” Meanwhile, it is to be insured by defendants at their expense for the benefit of plaintiff- — this clause impliedly recognizing some property right of plaintiff in the lumber even before delivery upon the cars.

The lumber is to be paid for by plaintiff when “manufactured according to specifications forwarded from time to time by party of the second part and delivered f. o. b. cars at Bend,” etc.

A fair construction of this clause binds plaintiff to not only pay for the lumber when delivered, but to furnish specifications whereby it may be delivered. The word “furnished” cannot be construed to have been used in the past tense, but in the future, and must therefore have the meaning of “to be furnished” and so construed.

Thus, In re Freeman, 27 App. Div. 593 (50 N. Y. Supp. 520), a statute provided that an officer might be removed upon charges “duly furnished.” The court held the word “furnished” meant that the charges should be furnished to some official body.

And in State ex inf. v. Lewin, 128 Mo. App. 149 (106 S. W. 581), it was held that the word “furnish” means to supply; therefore, we conclude. that the words “to be furnished” mean by interpretation, that the plaintiff was bound to supply defendants’ specifications for the lumber described in the contract.

Taking this construction, and there being no time fixed within which specifications — by which we understand particular kinds of lumber desired in a particular shipment — were to. be ordered, the law would imply a reasonable time, which, under all the circumstances, would have been a question of fact for the jury.

Another clause in the agreement provides that — •

“the party of the second part agrees to pay the parties of the first part for all lumber that the parties of the first part ship on orders furnished by the party of the second part, as herein-provided,” etc.

We think the two clauses last cited impliedly bound the plaintiff to furnish orders with reasonable promptness for all the lumber which defendants agreed to sell him, and that all of such orders were to be given and filled during the life of the contract and with reasonable diligence, from time to time during the life of the contract; and that if, after the contract was executed, the plaintiff had delayed unreasonably in furnishing orders from time to time, he would have been deemed to have abandoned the contract and been liable in damages for its breach.

Other clauses in the contract tend to sustain the theory of its mutuality.

Thus another clause reads:

“Final shipment of the lumber in this agreement to be made on or before January 1, 1920, time being the essence thereof.”

When we consider the agreement that the lumber was to be shipped upon specifications which, as we -interpret the contract, the plaintiff was impliedly bound to furnish, and that the whole quantity produced was to be shipped before January 1, 1920; it is fair to say that the defendants were bound to ship and the plaintiff to seasonably order for shipment all the lumber contracted for before January 1, 1920.

We have found no case cited by either party in which the contract sued upon was exactly like the one here in suit. Livesley v. Johnson, 45 Or. 30 .(76 Pac. 13, 946, 106 Am. St. Rep. 647, 65 L. R. A. 783), is similar in many respects and would seem to justify us in holding that the agreement on the part of the plaintiff to furnish and advance the sum of $9 per thousand, at the request of the defendants, upon certain qualities of the lumber when cut and piled, itself redeems the contract from the charge of want of mutuality.

That an agreement to buy may be created by implication is the rule announced in many cases.

In McCartney v. Glassford, 1 Wash. 579 (20 Pac. 423), the plaintiffs in error, defendant in the court below, contracted with Glassford to carry for them 100 tons of produce to the Little Dalles at the rate of one and one-half cents a pound, one half by April 16, and the other half by May 20, 1885; McCartney & Co. to pay the full amount of the freight charges at said rates upon delivery of the shipping receipts, certified as correct by their clerk. An action was brought to recover for freight charges on produce actually transported, and for damages caused by the refusal of the defendants McCartney et al. to furnish the remainder of the 100 tons contracted to be hauled. The defendants in the court below, McCartney et al., demurred on the ground that the contract was not mutual in that they had not bound themselves to furnish 100 tons of freight to be shipped. Concerning this contention the court said:

“The real contention of the appellee, however, seems to be that the contract is wanting in mutuality, binding only the appellee to carry the freight, and not requiring appellant to furnish any; or, even if he is so required, that by the subsequent waiver of time, he is relieved from any time for performance. The rule that, if no time is fixed for the performance of an agreement otherwise regular, a reasonable time will be presumed to have been intended by the parties, we think settles the claim of want of time.

“The remaining question is whether appellant is equally bound by the contract set out above. It is evident that the consideration of appellee’s assuming to carry said produce and incurring such liability was the implied promise of appellant to furnish it; and we believe the law will just as clearly and conclusively presume or imply such a promise on his part as if it had been set out in express words. To take any other view of a contract such as this would permit, in our judgment, a fraud and overreaching. There was a contract on the one part to carry, and on the other a contract to pay so much per pound; and there was from this just as clearly a corresponding and correlative obligation to furnish for carrying. ’ ’

Here the price is agreed upon; the quantity of lumber to be delivered is agreed upon; and the date of final delivery is agreed upon. Nothing is left, except the detail as to particular consignments which are to be made upon orders to be furnished from time to time by the purchaser, and these by necessary implication are to be made from time to time before January 20, 1920. This is a stronger case of mutuality than that above cited.

The case of Minneapolis Mill Co. v. Goodnow, 40 Minn. 497 (42 N. W. 356, 4 L. R. A. 202), is also instructive. In this case the plaintiff and defendant entered into an agreement as follows:

“The Minneapolis Mill Company agrees to saw for said John Goodnow, in its Jones Mill, so called, six million feet or more of pine logs, said sawing to be done in good workmanlike manner, and as shall be directed from time to time by said John Goodnow or his agent. Said John Goodnow agrees to pay said Minneapolis Mill Company for sawing, scaling, loading and delivering at his piling-place,” etc.

There was no express promise by Goodnow to furnish the logs to be sawed, and he claimed that for this reason the contract was .unilateral, but the court held that such a promise was implied, saying:

‘ * There is in this agreement no express promise on the part of Goodnow to furnish, for plaintiff to saw, the 6,000,000 feet of logs which the plaintiff is to saw for him and as he shall direct. Bnt that is necessarily implied. How conld it saw the logs as he should direct, unless he should furnish them? There can be little doubt that, as the parties understood this agreement when they executed it, Goodnow was thereby engaging to furnish the 6,000,000 feet of logs for plaintiff to saw, and the plaintiff was engaging to saw them in the manner and at the prices specified. A third party would so understand it. This being so, the contract was valid.”

It is difficult to distinguish in principle the case last cited from the case at bar. The court then goes on to distinguish the case then under consideration from the case of Bailey v. Austrian, 19 Minn. 465 (Gil. 465), which is cited by counsel for defendants in this action; the distinction in the Bailey case being that there was no specified amount to be furnished but only such amount as the purchaser “might want,” instead of a fixed amount or, as in the present case, the seller’s entire output with certain definite exceptions.

To the same effect see Eastern Ry. Co. of Minnesota v. Tuteur, 127 Wis. 382 (105 N. W. 1067); Chicago, R. I. & G. Ry. Co. v. Martin (Tex. Civ. App.), 163 S. W. 313; Thomas Huycke Martin Co. v. Gray, 94 Ark. 9 (125 S. W. 659, 140 Am. St. Rep. 93); Semon Bache & Co. v. Coopes, 35 Ind. App. 351 (74 N. E. 41, 111 Am. St. Rep. 171).

There is no substantial disagreement between the cases cited above and those cited by defendant’s counsel. In all the cases cited by defendants there was some important term, requisite to mutuality, missing and which could. not be supplied by reasonable implication.

Thus in American Refrigerator Transit Co. v. Chilton, 94 Ill. App. 6, the seller agreed to sell and deliver to the purchaser all the ice the purchaser might require; but it was held unilateral because the contract did not bind defendant to take any ice. This case is very close to the line, and, with all deference to the ability of the court rendering the opinion, the writer is inclined to take a different view from that taken by it; but the case, on the face of .it, is easily distinguishable from this case, where there is an agreement to sell the entire output to the purchaser, and not to sell to anyone else, and where the time limit of performance is fixed and the obligation to furnish seasonable orders appears by necessary implication.

In Santella & Co. v. Lange Co., 155 Fed. 719 (84 C. C. A. 145), the plaintiff agreed to sell to the defendant (a cigar dealer) as many cigars of a particular brand, as the defendant “desired for his wants.” This contract was held unilateral, and it was obviously so, since it left the purchaser at liberty to “desire” any quantity or none at all of that particular brand.

In American Cotton Oil Co. v. Kirk & Co., 68 Fed. 791 (151 C. C. A. 540), the action was upon a contract for the sale of oil. The memorandum of the transaction was as follows:

“Dec. 23, 1891.

“American Cotton Oil Co.: 10,000 bbls. prime yellow cottonseed oil at thirty-two and a half cents per gallon, delivered in Chicago, with the option of taking the 10,000 bbls. in tank cars loose at thirty cents per gallon. Deliveries to be made per week as Kirk & Co. desire. Payments ten days after arrival of oil at our (Kirk & Co.) works. * * ”

There was no time specified within which final delivery should be made, and the defendants might have ordered a barrel a week for ten thousand weeks and thus have prolonged the delivery indefinitely. In the case at bar the final delivery was to be made by January 1, 1920.

This distinction is pointed out and commented on in Baumhoff v. Oklahoma City Electric Co., 14 Old. 127 (77 Pac. 40), where the case was cited.

In Morrow v. Southern Express Co., 101 Ga. 810 (28 S. E. 998), the action was for breach of a contract with defendant to carry all the milk plaintiff might offer for shipment at a certain rate of carriage. It was held that this was unilateral because the contract did not bind plaintiff to furnish any milk for shipment, and it is plain that there is no reasonable or necessary implication that plaintiff should furnish any milk for transportation.

Without a further discussion of the authorities cited by able counsel for appellant, it may be said that all the cases cited by him are subject to the same distinctions from the ease at bar, as those attempted to be drawn above.

Counsel’s theory is ingenious and ably urged, but regard for fair dealing among men dictates that we must hold the contract in suit to have been valid and binding upon both parties, and send this case back for trial upon the merits. It appears from the transcript that in view of the ruling of the court, excluding plaintiff’s evidence, both parties waived other causes of action and defense and counterclaim, which they probably would not have done'had such ruling not been made. It is only fair that they should be permitted, if they so desire, to so amend and reform their pleadings as to try out all matters at issue between them.

This opinion may seem unnecessarily long, but the question presented is a difficult one, beset by many fine distinctions, and we have tried to so blaze the way that a final trial may proceed without subjecting the learned trial judge to the necessity of ruling in a moment, as he necessarily must, upon questions which require time for consideration.

The judgment is reversed and the case remanded for trial. Reversed and Remanded.

Burnett, Benson and Harris, JJ., concur.