GRIMWOOD et al. v. MUNSON S. S. LINE.

(Circuit Court of Appeals, Second Circuit. May 4, 1921.)

No. 183.

1. Shipping 108 Shipper held not to have established damage caused by defendant's refusal to furnish ships under agreement.

In a suit for breach of contract to furnish ships to transport plaintiff's coal into Mexico, plaintiffs proved no legally recoverable damages, where they did not show that they had bought any coal for shipment into Mexico, or had sold coal there for importation from the United States, and even if they had coal to ship they were bound to get other tonnage, and could recover of the shipowner only the difference between the contract price and the price they had paid.

2. Shipping 108-Contract to furnish ship for transporting coal held not a requirement contract.

A contract whereby shippers agreed to send all their coal to Mexico by defendant's ships, but did not bind themselves to ship any coal at all, and their shipments were so variable that no reasonable estimate of their tonnage requirements could be made, does not fall within the exception of the general rule that executory agreements must be for ascertained quantities, which applies in case of established business whose future requirements may be reasonably estimated.

3. Estoppel 63-Shipowner cannot attack contract after assigning another reason for nonperformance.

A steamship company, which gave as the reason for refusing to furnish ships for transportation of coal to Mexico the unsettled conditions in Mexico, cannot, after suit for breach of contract is brought against it, defend on the ground that the contract was not a requirement contract, but a wish, will or want, contract, and therefore void.

4. Shipping 108-Previous breach by shipper is waived by assignment of another reason for refusal to furnish ships.

A previous breach by shipper of a contract to ship all its coal to Mexico by defendant's steamers is waived, where defendant assigned as its sole reason for refusing to supply ships to the shipper the unsettled conditions in Mexico.

5. Shipping 108-Failure to ship any coal is not breach of requirement contract.

A contract to ship all the coal required in plaintiff's business by defendant's vessels is not breached by the failure to ship any coal, if no shipments were needed in plaintiff's business, and none were shipped through other parties.

In Error to the District Court of the United States for the Southern District of New York.

Suit by Adolfo Grimwood and another, copartners, doing business under the name of A. Grimwood & Co., against the Munson Steamship Line. Judgment for defendant, and plaintiffs bring error. Affirmed.

Kellogg, Emery & Cuthell, of New York City (Frederic R. Kellogg and Earle L. Beatty, both of New York City, of counsel), for plaintiffs in error.

Kirlin, Woolsey, Campbell, Hickox & Keating, of New York City (John M. Woolsey, Edwin S. Murphy, and Theodore M. Hequembourg, all of New York City, of counsel), for defendant in error.

Before WARD, HOUGH, and MANTON, Circuit Judges.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(273 F.)

WARD, Circuit Judge. This case has been here on a former occasion, 249 Fed. 722, 161 C. C. A. 632. The plaintiffs are engaged in the business of selling coal and coke in Mexico imported from the United States. January 31, 1912, they made a contract in writing with the defendant, whereby they agreed to ship all their coal and coke from the United States to Mexico between January 1, 1913, and December 31, 1915, by the defendant's steamers and the defendant agreed to furnish steamers to carry the same. The parties had been doing business together on these terms since 1909.

March 17, 1915, the plaintiffs called for a steamer which the defendant refused to furnish on the ground of the chaotic conditions in Mexico. November 4, 1915, the plaintiffs called for four steamers, which the defendant refused to supply because it "did not feel called upon to furnish steamers for Mexico at present, owing to the unsettled conditions which prevail there." November 18, plaintiffs modified their demand in certain immaterial particulars, and the defendant, November 23, replied that it did not consider that it was under any obligation to furnish the steamers. No new reason being assigned, it stood upon the reason theretofore given.

Thereupon the plaintiffs brought this suit. The defendant in its answer denied that the contract set up in the complaint was a valid and binding contract, and pleaded in defense that, if it were, the plaintiffs had themselves broken the contract by not shipping any coal between June, 1913, and March, 1915, a period of some 20 months.

[1] Judge Mayer, assuming, without deciding, that the contract was valid, held that the plaintiffs had proved no legally recoverable damages, because they had not shown that they had bought any coal in the United States for shipment to Mexico, or that they had sold any coal in Mexico to be imported from the United States. This was quite in accord with our former decision that the agreement for transportation was an incident of the plaintiffs' actual business of selling coal in Mexico and that they were not speculating in tonnage as a commodity. If they had no coal to ship, they were not damaged by the defendant's refusal to supply tonnage. On the other hand, if they had coal to ship, they were bound to get other tonnage, and recover of the defendant the difference between the contract price and the price they had to pay. The measure of their damages would not be the loss of profits from their coal business in Mexico, but the extra price which they had to pay for the tonnage not furnished. An admirable discussion of the precise question is to be found in Irvine v. Midland Great Western Railway Co., 6 Law Reports (Ireland) Common Law (1880). See, also, The Oregon v. Pittsburgh & L. A. Iron Co., 55 Fed. 666, 5 C. C. A. 229; Hughes v. Coal Co., 269 Fed. 589.

[2] The further question has been argued whether the contract was binding at all. This depends upon whether it was a requirement contract, or a wish, will, or want contract. While the plaintiffs agreed to send all the coal and coke they shipped from the United States to Mexico by the defendant's steamers, they did not bind themselves to ship any at all. How very variable their shipments were is to be seen from the fact that in the year January 1, 1909, to January 1, 1910, they

shipped 49,520 tons; June 1, 1910, to June 1, 1911, 133,400 tons; June 1, 1911, to December 31, 1911 (seven months), 21,114 tons; January 1, 1912, to December 31, 1912, 63,517 tons; January 1, 1913, to December 31, 1915, 66,441 tons.

After June 28, 1913, they shipped no coal at all to Mexico. With these facts in mind, how can it be said that the plaintiffs' business was one in which a reasonable estimate of its tonnage requirements could be made? The contract does not fall within the exception to the general rule that executory agreements of purchase and sale must be for ascertained quantities which applies in case of established businesses whose future requirements may be reasonably estimated.

[3] However, as the defendant gave, as the only ground for refusal to furnish the tonnage, the chaotic state of affairs in Mexico we think that it could not, after suit brought, defend on the ground that the contract was not a requirement contract, but a wish, will, or want contract. Ohio & M. R. Co. v. McCarthy, 96 U. S. 258, 267, 24 L. Ed. 693; Luckenbach Co. v. Grace & Co., 267 Fed. 676.

[4, 5] The defendant argues that this principle does not apply, because the plaintiffs themselves first broke the contract by not shipping any coal at all for some 20 months. If, however, the agreement is a requirement contract, this would not be a breach, if the plaintiffs did not need the tonnage in their business. Even if it were, the defendant waived the breach by basing its refusal to furnish tonnage solely on the chaotic conditions in Mexico. If during this period the plaintiffs had shipped coal and coke to Mexico through other parties, the case would be more like Loudenback Fertilizer Co. v. Phosphate Co., 121 Fed. 298, 58 C. C. A. 220, 61 L. R. A. 402, on which the defendant relies. In it the plaintiff's business involved manufacturing acid phosphate from crude phosphate rock, and it contracted to buy all the phosphate rock it needed from the defendant. For two years the plaintiff ceased manufacturing phosphate, because it found it cheaper to buy it. When, however, the price for it rose, it called upon the defendant for a large quantity of crude phosphate rock. The court held that buying the manufactured acid phosphate from other parties was a breach of the contract, and the defendant, not having waived the breach, was under no obligation to furnish the crude phosphate rock. The judgment is affirmed.

HINES, Director General of Railroads, v. MEIER. (Circuit Court of Appeals, Eighth Circuit.

No. 5502.

May 4, 1921.)

Master and servant 361-Director General of Railroads subject to state Workmen's Compensation Law: "employer."

Under South Dakota Workmen's Compensation Law, providing that all employers and employees, not engaged in interstate or foreign commerce. shall be bound by its provisions unless they affirmatively exempt themselves therefrom; that "employers" shall include the state, its municipal For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(273 F.)

corporations, and other political subdivisions, and that all employers, except the state and such subdivisions, shall procure insurance, furnish aeceptable proof of solvency or make a guaranty deposit, the Director General of Railroads, who by presidential order was made subject to "all statutes and orders of regulating commissions of the various states," in operating lines in South Dakota and with respect to employees injured or killed in his service and not employed in interstate commerce, held subject to the provisions of such statute, being, as the representative of the federal government, like the state and its subdivisions, exempt from the requirement to procure insurance, give proof of solvency or make a deposit.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Employer.]

In Error to the District Court of the United States for the District of South Dakota; James D. Elliott, Judge.

Action at law by Cecilia Meier against Walker D. Hines, Director General of Railroads. Judgment for plaintiff, and defendant brings error. Reversed and remanded.

Ed. L. Grantham, of Aberdeen, S. D. (C. O. Newcomb, of Aberdeen, S. D., on the brief), for plaintiff in error.

Harry A. Brenner, of Mobridge, S. D., for defendant in error.

Before HOOK and CARLAND, Circuit Judges, and TRIEBER, District Judge.

HOOK, Circuit Judge. This was an action by Cecilia Meier, administratrix, against the Director General of Railroads, operating the Chicago, Milwaukee & St. Paul Railroad, to recover for the negligent killing of Ludwig Meier. The deceased was in the service of the Director General as a blacksmith's helper at Mobridge, S. D. He was run over and killed by a train January 3, 1918, while crossing the tracks of the railroad yards at that place in going from his home to the blacksmith shop where his duties were performed. There was a verdict and judgment for the plaintiff, and the Director General prosecuted this writ of error.

The "South Dakota Workmen's Compensation Law," approved March 10, 1917 (Laws 1917, c. 376), has an important bearing on the

It provided (section 2) that every employer and also every employee (not engaged in interstate or foreign commerce, section 17,) should be presumed to have accepted its provisions for the payment and acceptance of compensation for personal injury or death by accident in the course of employment. They were bound by the provisions of the act unless they affirmatively exempted themselves from it. Every employer subject to the act was required (section 4) to insure the payment of compensation to his employees in the manner provided (section 46), in some corporation, association, or organization approved by the state department of insurance. A refusal or neglect of the employer to obtain the insurance or to do what was equivalent as hereafter mentioned made him liable in case of injury to the workmen in his employ "under part one (1) of this act"-part 1 being sections 1 to 19 inclusive. The employer was authorized (section 54) to omit

the insurance upon furnishing proofs satisfactory to the Insurance Department and the State Industrial Commissioner of his solvency and financial ability to pay the compensation and benefits provided, or by depositing satisfactory security in lieu thereof. The term "employer" included (section 55) the state, its municipal corporations and other political subdivisions; but those public bodies were not (section 16) subject to sections 3, 9, and 10. Every employer who elected not to operate under the act was deprived (section 9) of certain common-law defenses, including that of contributory negligence, in any suit by an employee who had accepted the act. The rights and remedies granted an employee subject to the act on account of personal injury or death by accident in the course of employment were (section 5) exclusive of all other rights and remedies of such employee, his personal representatives, etc. A graduated schedule of compensation was prescribed (section 20 et seq.); and the compensation provided and the provisions of the act constituted (section 27) the measure of the employer's responsibility for injuries or death of employees subject to the act. The administration of the act was committed (section 27 et seq.) to the State Industrial Commissioner, and extensive powers were conferred upon him. The judgment recovered by the plaintiff largely exceeded the maximum compensation authorized by the act.

According to the proclamation of the President of December 27, 1917, taking over the operation of the railroads, the Director General was subject to "all statutes and orders of regulating commissions of the various states" until and except as otherwise ordered by him. The purposes of the South Dakota Act were of a humanitarian character; they were beneficial to both employers and employees. They were not inconsistent with the powers and duties of the Director General in the conduct of the railroad business on government account, and not having exempted himself from the operation of the act he should be assumed to have accepted it in a general sense, so far as its terms were applicable. The deceased did not exempt himself and was also subject to its terms. As the accident occurred during government control, the fact that plaintiff's action was first brought against the railway company and afterwards continued as to the Director General is unimportant. As a blacksmith's helper the deceased was not engaged in interstate commerce, a character of service that was excepted from the act in question. See New York Central R. Co. v. White, 243 U. S. 188, 37 Sup. Ct. 247, 61 L. Ed. 667, L. R. A. 1917D, 1, Ann. Cas. 1917D, 629. The question whether the accident occurred in the course of the employment of the deceased was submitted to the jury and we accept their finding that it did. The trial court charged the jury that the circumstances of the accident showed as matter of law the deceased was guilty of contributory negligence. But as the Director General had not procured the liability insurance (section 4 and section 46), and had not in lieu thereof furnished proof of solvency and financial ability or given security (section 54) he was denied that defense.