Scott v. Kittanning Coal Co. , 89 Pa. 231 ( 1879 )

Mr. Justice Trunkey

delivered the opinion of the court, May 5th 1879.

The Kittanning Coal Company agreed to deliver, on board vessels at Greenwich wharves, fifty thousand tons of its best run of mine bituminous coal, denominated Excelsior vein, from collieries in Clearfield county, commencing with March 1st 1874, and ending with February 1875, at the rate of six thousand tons monthly, at the option of John C. Scott & Sons, they giving notice on or before the 25th day of each month of their requirements for the succeeding month. Scott & Sons agreed to furnish vessels for and receive the above stated quantity of coal, and make payment therefor at thirty days from date of each bill of lading. That the contract was not entire, but severable, is obvious: Lucesco Oil Co. v. Brewer et al., 16 P. F. Smith 351; Morgan et al. v. McKee, 27 Id. 228.

The company delivered, and Scott & Sons received, under this contract, eighteen thousand thirty-eight and one-half tons of coal. This must be taken as an uncontroverted fact. The defendants affirm it. The plaintiffs proved it in the first breath of their testimony ; repeated it, and added that this suit was brought to recover the damages sustained by the company by the neglect of Scott & Sons to take (or rather call for, when the amount would have been readily supplied) the balance of the fifty thousand tons at the price named in the contract (see their history of the case); and, in their declaration, aver that they “have done all things on their part required by the said agreement to be done, and were always ready and willing to deliver coal pursuant to .their said contract to said defendants; and although said defendants did accept and pay for a small quantity of said coal, to wit, ten thousand tons, yet they, the said defendants, did not, nor would not, during the term of the said agreement, receive the residue of said coal.”

During the whole time for delivery and receiving of the coal, the defendants gave no notice, on or before the 25th of any month, of their requirements for the succeeding month. Deliveries were made from time to time, as called for, beginning in March and ending in October. This also both parties affirm.

It was the duty of the defendants to make the calls for the coal, not exceeding six thousand tons per month, and receive the same, so as to permit delivery of the fifty thousand tons within the time limited. Nothing in the offers of testimony, for the purpose of showing a waiver of the requirements as to notice, would warrant a jury in finding that the defendants were relieved.from making calls so that the plaintiffs could deliver the coal within the terms of the contract. What matters it whether proof were received of a course of dealing, showing a waiver of notice on the 25th day of each month, when the fact was already patent and undeniable that no coal was delivered or received without notice, and that such notice never was given on that date, but on such dates as suited defendants’ convenience ? The rulings upon those offers were not erroneous.

When notice was given to the plaintiffs, if they were bound to deliver at all in pursuance thereof, they were bound to deliver the very coal designated by the contract. They could not lawfully substitute any other without defendants’ consent; and defendants could have refused any other coal, whether inferior or superior, for they were entitled to the specified article. If the plaintiffs stealthily substituted inferior coal, they perpetrated a fraud upon defendants, for which they are answerable. If authority were wanting for the foregoing, it is in the cases cited by defendants, but it is not gainsaid.

It is contended by defendants that if fraudulent substitution of coal was made in the delivery, they may now rescind the contract. The cases cited, we think, do not rule this. Where a servant or laborer claims wages, a physician or attorney fees, an agent or trustee commissions, fidelity lies at the bottom of the service, the breach whereof forfeits right of compensation. If two have an executory contract and one colludes with the other’s agent respecting its performance; or if in an agreement for sale, the price to be fixed by C., one party bribes C., the wrongdoer shall not profit by his turpitude, nor by the agreement itself. In a sale and delivery of goods, there is not such relation of trust and confidence as where one does service for another, and in delivery of a similar but different article there may be no fraudulent intent, and if there be, it is not of so heinous a nature as bribing a referee or corrupting the other’s agent. True, a fraudulent delivery of one article for another authorizes rescission of an entire contract, perhaps would of a severable one, but not after the goods had been accepted, paid for and consumed. Rescission is one form of remedy for a defrauded party which, generally, he may exercise upon discovery of the fraud, though he cannot wholly restore; and if the fraud be not discovered in time for that remedy, others remain whereby he may recover damages. This contract was severable and the coal delivered was paid for and used by defendants. They can restore nothing. They never notified plaintiffs that they would receive no more coal for their default in performance. We are not convinced that there was error in holding that the appropriate remedy for the alleged fraud, discovered at the trial, wras by set-off or action for damages.

The pleas were “payment” and 11 non assumpserunt.” During the trial defendants moved' to amend by pleading set-off specially, which was denied. Had notice been given, under the plea of payment, the set-off could have been proved with like effect, as if specially pleaded, and, consequently, the motion was really for leave to then give notice of special matter. Whether to allow it was in the discretion of the Court of Common Pleas. The case was not brought within the Act of 1806, which permits a defendant to “alter his plea or defence, on or before the trial of the cause.” The rights of defendants under that act are well stated by Lewis, J., in Yost v. Eby, 11 Harris 327.

Error is assigned to the rejection of evidence of a false statement of the president of the company, as to the cost of placing coal on board vessels at Greenwich, made in negotiations for the contract. An action for deceit for fraudulent misrepresentation by the vendor of the price he had paid, or of the price he had been offered for the subject of the contract cannot be sustained: Hemmer v. Cooper, 8 Allen 334; Davis v. Meeker, 5 Johns. 354. The defendants rely on Krumbhaar v. Birch, 4 W. N. C. 144, and Short v. Stevenson, 13 P. F. Smith 95, as ruling the point in their favor. The former is where one sold his right, title and interest in a patent right, for territory including Philadelphia, representing that he owned half the patent right, whereas, he had before sold his whole interest for Philadelphia; and the latter where one purchased land for himself and associates, and pretended to his associates that he had paid $12,000 for it when he had only paid $6000. These decisions do not touch the question, is it a fraud for a vendor to misstate the cost or price of the article he is selling ? The legal answer seems as well settled as the moral one, though they are dissimilar, and the seventh assignment is not well taken.

By the plea of non assumpsit, the defendant puts the plaintiff on proving his whole mase, and entitles himself to give in evidence anything which shows that, at the time the action was commenced, the plaintiff had no right to recover: Heck v. Shener, 4 S. & R. 248. That action was for housekeeper’s services and for goods sold, and it was held that, under the plea, evidence was admissible that the plaintiff had embezzled goods of defendant, not as a set-off, but to defeat the action. “As to the objection of the plaintiff being taken by surprise, it is no greater surprise, than when under the same plea, the defendant gives in evidence, a release, infancy or coverture. Neither do I think there is much force in the other objection, that the matter of the evidence is not a liquidated debt or demand. If it is of 'sufficient magnitude to bar the plaintiff’s action, there will be no need of going into calculations. But if not sufficient for that purpose, it is as easy for the jury in this action to ascertain the amount to be deducted from the plaintiff’s demand, as it is for the jury in an action to be brought by the defendant against the plaintiff to ascertain the amount of his damages.” Per Tilghman, C. J. Under this plea the defendant may show that the plaintiff is an insolvent debtor and the cause of action vested in his trustees; that the plaintiff accepted goods at another place than that mentioned in the contract; a former recovery; and that the work for which the plaintiff claims was done in an unworkmanlike manner: Kennedy v. Ferris, 5 S. & R. 394; Scott v. Province, 1 Pitts. 189; Gilchrist v. Bale, 8 Watts 355; Gaw v. Wolcott, 10 Barr 43. In Falconer v. Smith, 6 Harris 130, it was held that, in an action on notes given for machinery, it was competent for the defendant to prove that when the agreement was made the plaintiff warranted the machinery to be of a certain quality and that the warranty had failed, though the notes were given several months after the date of the agreement. The plea of non assumpsit “entitles the defendant, without prior special notice, to give evidence of anything which shows, ex cequo et bono, the plaintiff ought not to recover. This is emphatically true of matters of defence springing from or immediately connected with the transaction sued on, and impeaching the consideration of the contract averred by the plaintiff. * * * It is true that under our more recent decisions, unliquidated damages for a breach of warranty may be averred as matter of set-off, and then a special plea or notice would be necessary; but, as was justly observed in Sadler v. Slobaugh, 3 S. & R. 388, a breach of warranty may, at the option of the defendant, be either reserved as the foundation of a separate action, or set up as a defence, going to the consideration of the assumpsit sued on.” Per Bell, J.

In various forms the defendant offered to prove that the plaintiffs fraudulently substituted inferior coal from other mines for that which they had contracted to deliver, and, concealing this fact, delivered the inferior article in part performance of the contract; that the defendants did not know at the time of such deliveries that the coal was of this inferior character; that finding objections made by their customers they inquired of plaintiffs and were assured by them that the coal delivered was of the kind, stipulated, and they accepted and paid for the same as part of the coal mentioned in the contract, believing it to be such; and that this fraudulent substitution involved the defendants in great loss, prevented them from making sales of the balance of the coal mentioned in the contract, and disabled them from receiving the same.

At present it must be taken as if they had the testimony at hand to establish the facts in the offers. Had it been received it might have availed as a complete defence. The matter was immediately connected with the transaction which is the basis of this suit; it shows a wilful injury in the performance of part of a contract by the plaintiffs upon which they claim damages because the defendants failed to perform. By the settled law of this state the offered testimony was admissible under defendants’ plea of non assumpse-runt, not to prove a set-off, but to prove that the plaintiffs had no right to recover. Besides, it was again specially offered as tending to prove that the plaintiffs were not ready and willing to deliver the coal stipulated in the contract. Why was it not admissible for this purpose? If the company pretend they were always ready and willing to perform, is it not evidence in rebuttal that when called on fof coal they gave it from other mines ? Slight it may be in the opinion of the court, but its weight was for the jury. We are of opinion there was error in rejecting the offers of testimony set forth in the second, third, fourth, fifteenth and nineteenth assignments.

The only remaining assignments we shall notice are the twenty-fifth, twenty-sixth and thirty-first, which relate to the question of damages. We think the instructions of the learned judge correct, except in not considering the value of the coal in plaintiffs’ mines; but it seems his attention was not directed to this, and we would pass it, were the cause not to be tried again. Compensation should be the criterion in this as in other actions for breach of contract. Most frequently the simple rule that the measure of damages is the difference between the contract price and the market price at the time the contract ought to have been completed, gives the injured party a fair recompense for his loss. In a case like this that would be inadequate. Had the plaintiffs mined and stocked so large a quantity of coal the loss in increased handling, waste and the like, would not be covered by the difference between the market and contract price, to say nothing of the improbability of finding a market for the coal. The contract did not require them to mine and stock — it was enough if they were competent to deliver the coal according to contract; that is, had their mines in order, the miners, and all necessary means to mine and deliver the coal, and were prevented by default of defendants. In such case, nothing ■ short of the value of the contract would be a compensation. That would be determined by deducting from the contract price the cost of delivery, including the royalty and the value of the coal as it remained in place. Possibly the coal, in the opened mines, in working order and with large capacity, at the time the contract should have been performed, was of no value to the vendors. It may have been worth nothing above the royalty. Unless it was worthless as it remained in place, the property of the plaintiffs, they ought not to recover the difference between the contract price and the sum of the cost of delivery and royalty.

Judgment reversed, and a venire facias de novo awarded.