Baltimore & Ohio Railroad v. Brydon ex rel. Davis

Bryan, J., delivered the opinion of the Court. The Baltimore and Ohio Railroad Company contracted with William A. Brydon, to purchase from him a large quantity of coal. It was agreed that Brydon was to deliver to the railroad company daily, not less than one hundred and fifty and not more than three hundred tons of coal, of such quality as should be satisfactory to the railroad’s master of transportation and master of machinery ; and that the deliveries should commence on the fifteenth day of July, 1815, and should continue for three years. The price agreed to be paid was a dollar and fifteen cents a ton.

After a considerable quantity of the coal had been delivered, the railroad company refused to receive any more, because it had been condemned as unsatisfactory by the masters of machinery and transportation. At the trial below, the Court ruled that if the rejection of the coal was not made in good faith, it would not be a sufficient justification to the railroad company in refusing to continue the receipt of it. The correctness of the opinion of the Court as a legal proposition was not questioned in the argument of this case. It is fully supported by the decision in Lynn vs. B. & O. R. R. Co., 60 Md., 404 .

But it was most earnestly maintained that there was no evidence in the cause proper to be submitted to the jury to show a want of good faith. We cannot form a just opinion of the rights of the parties under this contract, unless we take a view of the circumstances under which it was made. We must consider the subject-matter of the agreement and the knowledge of if which the parties possessed; the objects which they ²¹⁶ sought to accomplish and the inducements which they had for dealing with each other as they did. “Courts, in the construction of contracts, look to the language employed, the subject-matter, and the surrounding circumstances. They are never shut out from the same light which the parties enjoyed when the contract was executed, and, in that view, they are'entitled to place .themselves in the same situation as the parties who made the contract, so as to view the circumstances as they viewed them, and so as to judge of the meaning of the words and of the correct application of the language to the things described.” Nash vs. Towne, 5 Wallace, 689.

There are two extensive seams of coal in Western Maryland, which are known respectively as the Big Vein and the Six-foot Vein, and of these the former is of far superior quality to the latter. The existence of these seams, and the respective qualities of the coal were well known to the parties to this suit. The evidence for the plaintiff tended to prove the following facts among others: that he exercised complete control, as if owner, over the North Branch Mine, which was in the seam, known as the Six-foot Vein ; that he supplied the defendant with coal from this mine in the latter part of 1874 and early in January, 1875 ; and that in consequence of certain negotiations, he began on the 17th day of January, 1875, to furnish to it, regular supplies daily, and continued to do so until August 4th, making very rarely any intermission, except on one day in each week; that the daily amount supplied was seldom less than a hundred tons, and in frequent instances it was much more ; that in.December, 1874, Westall, defendant’s supervisor of engines, made a test of the coal in obedience to the orders of the master of transportation, and reported the result to him; that in February, 1875, the defendant’s master of machinery had a conversation with plaintiff in reference to the quality of this coal, as compared with the Big Vein coal, in which he said: “ If the use of ²¹⁷ this coal presents any difficulty, any increased difficulties, we can overcome them by an alteration of the machinery, that is, the grate-bars in the furnace ; ” that the coal was delivered to the defendant through Cowan, its coal agent and inspector, who examined it; that on one or two occasions, he complained of it, but, as a general rule, he said it was satisfactory; that the coal was mined clean, and was of a good quality, being fairly up to the standard of the North Branch mine; that on the 17th day of May, 1875, the contract was made between the parties which has given rise to this suit; that some deliveries of coal were made between August 11th and August 28th, inclusive of both dates, and no more were made until October ; that in the middle of August a test of the coal, was made by Shipley, defendant’s supervisor of engines, and another was made in October by Hepburn, one of defendant’s officers, and the result of this last test was communicated to the master of machinery; that in February, 1875, plaintiff was informed by the master of transportation that complaints were made about the coal, and that in June, 1875, he was again informed that there had been a great deal of complaint of the coal by the engine-men, and that if he did not furnish good coal, the defendant would have to purchase elsewhere ; that on the 7th of October, 1875, the defendant commenced again to receive coal from the plaintiff, and continued to receive quantities nearly every day until May 6th, 1876, and there was a delivery on May 15th; that these deliveries usually ranged from sixty to seventy tons at a time ; that there were no complaints of the coal between October, 1875, and May, 1876. On May 2nd, 1876, the master of machinery gave the plaintiff notice that the use of his coal would be discontinued by the defendant after the 6th day of the month.

There was also evidence for the plaintiff tending to prove that at the time the contract was made, the defendant was paying a dollar and twenty-five cents ²¹⁸ a ton for the Big Vein coal, and that there was a fall in the price of Big Vein coal in the years 1875 and 1876 of from ■ twenty-five to thirty cents a ton (one witness testifying that the year 1875 opened with fairly firm prices, and that it was after the business opened that the prices commenced to break). The plaintiff testified that, from July, 1875, to December, 1876, there was a decline of from twenty to twenty-five cents a ton in the price of Big Vein coal, and that the qualities of coal that were furnished to the defendant were the same as those furnished for the Westall test; also that Sharp, the master of transportation, repeatedly, from the first of January, 1875, down to the day of the contract, expressed his satisfaction with the coal ; that, during all that period, he called plaintiff's attention only on one occasion to any complaint about the quality, and that was in February; and that in a subsequent conversation plaintiff satisfied him, and that in September, 1875, plaintiff called on him in regard to the stoppage which had taken place. Plaintiff’s testimony at this point is in these words : “ In September, 1875, he said to me, that the coal was satisfactory to him, but that his action had been dictated by Mr. Garrett, his superior officer, because of the steamer difficulty; that is as condensed as I can give; we had quite a conversation.” And he testified that he had a conversation with Davis, the master of machinery, in August, 1875, and this is the account he gives of it: “ Mr. Davis, at that time told me — I called on him in regard to the coal — that my coal was satisfactory to him, but the difficulty had arisen on account of the steamer trouble.” “ He explained to me that when this trouble arose down there about the steamer difficulty, it was objected to by the steamers; that he himself went down there and had the coal brought up to Mt. Clare and burnt in his locomotives.” “ I simply referred to my contract in the matter of our conversations, and urged him to carry it out; and I spoke of my own connection and my own affairs in relation to it, and the hardness ■ ²¹⁹ that was coming on me, and he then said, ‘ Mr. Brydon, Mr. Garrett is very much out of humor about this matter— this steamer difficulty, (as he spoke it), — and says, don’t press the matter, but just leave it with me, and I will resume taking your coal, and will increase it hereafter to the amount required.’ ” We have given the salient points of the evidence for the plaintiff bearing on the question under consideration, not finding it necessary for the purpose of this inquiry to give an abstract of the large amount of testimony which appears in the record.

On the part of the defendant the evidence controverted the plaintiff’s case in every important particular by clear, positive and unambiguous testimony. It tended to prove that the master of machinery and transportation rejected the coal in the exercise of a fair, honest and competent judgment, without being influenced by any other person, and it positively denied the conversations testified to by the plaintiff as having taken place with them. There was also evidence of the particulars of certain tests which had been made of this coal; one by Harrison, defendant’s assistant master of machinery, in November, 1874; one by Toomey, its supervisor of trains, made in June, 1875, and one by Shipley, its supervisor of engines, made in August, 1875. And evidence was offered tending to show that the judgment of the masters of transportation and machinery was founded on the fact that these tests showed that the coal was not suitable to the purposes of the defendant.

Let us examine the contract more particularly than we have yet done. It provided that the defendant was to build at plaintiff’s mines as many coal shutes as might be necessary for supplying with coal the tenders of defendant’s locomotive engines run and used on the third division of its road, and then a stipulation was made for the payment by the plaintiff’ of the cost of construction, and then the further agreement was made that the plaintiff was to ²²⁰ furnish daily for the use of defendant’s locomotive engines on the third division of its road, not less than one hundred and fifty nor more than three hundred tons of coal, to be of such quality as should be. satisfactory to defendant’s masters of transportation and machinery; the price was stated, and it was agreed that the delivery of the coal was to continue upon the terms mentioned for the period of three years from the fifteenth day of July, 1875. For several months previous to the date of the contract, the plaintiff had been supplying the defendant with coal from his mine, and the coal had been twice, tested by the order of the defendant; the result of one test had been reported to the master of transportation and the result of the other to the master of machinery. This contract was made after some negotiations between the parties.

It canuot be a matter of doubt that both parties intended that the coal ■should be furnished from the plaintiff’s mine. As a matter of course 'it was not expeeted that it should be equal in quality to that which came, from the Big Vein Mines ; and no just construction of the contract can give to it such a meaning. It was, however, to be satisfactory to the officers who were named. But this term' of the contract did not give them a capricious or arbitrary discretion to reject it.

It was their judgment which was to decide the question of acceptance ; but the law required them to exercise a fair, just and honest judgment on the subject. Certainly they were not obliged to accept the coal, if they thought it was not fit for the uses contemplated by the contract; neither on the other hand would they be justified in rejecting it for the reason that it did not possess' qualities, which at the time of the contract it was known by the parties that it did not possess. By the terms of the contract the whole decision was committed to them; if they made their decision against the coal in good faith, the defendant would not be obliged to accept it, but if they fraudulently rejected it, their judgment would be without effect ²²¹ in law, and tlie defendant would not be excused by it. We on this point refer to Lynn’s Case, 80 Md., 404 , and approve and adopt it.

On tlie question of fraud, it was proper that tlie evidence should take a wide range. It was competent to show to the jury what knowledge, and what means of knowledge, the defendant had of the coal from plaintiff’s mine before and at the time of the contract; and every fact and circumstance which would show what expectations it might reasonably and justly form in respect to its fitness for the purposes to which it was to be applied. It was proper also to show whether the coal fulfilled these expectations, and whether the officers who were to decide on its rejection knew, or had the means of knowing, its. quality ; and whether there were any circumstances which might induce them to make an unjust decision in the interest of the defendant. It was proper also to prove acts, declarations or statements of these officers which would show what opinion they really had of the merits of this, coal.

The plaintiff had a right to tender coal to the defendant every day during the three years succeeding the fifteenth day of July, 1815 ; provided it was of a quality satisfactory to these officers; and as a matter of course, he had a right to the honest exercise of their judgment every day during this period. They could not deprive him of this right by condemning the coal once for all. This action on their part was a continuing condemnation for the whole time, whieh dispensed the plaintiff from the necessity of a tender in the future, bu| which could not impair-any of his rights. It was in effect a declaration that they intended to adhere to their decision throughout the period of the contract, and. subsequenti events showed that they did adhere to it.

The inquiry was open to him daily and every day, whether the condemnation was honest and bona fide; and on this inquiry, according to all the authorities, their declarations were competent evidence. ²²² We have said that the evidence for the plaintiff was strongly opposed by the countervailing evidence for the defendant. Nevertheless, it was not in the power of the Court below to withdraw it from the jury. They had a right to consider it in connexion with the other facts and circumstances proved before them and to draw from it such inferences as they thought it would justly authorize. If they thought it proved that the rejection of the coal was not made in good faith, they had a right so to declare by their verdict.

By the immemorial practice of the Maryland Courts the jury has an unqualified right to form its judgment on the facts which the Court determines to be legally sufficient, without any interference or control on the part of the Judge. After the verdict is rendered, the Judge who tried the case may set it aside and grant a new trial in his discretion, if justice so require. But the functions of this Court are much more limited. We have no right to decide on the correctness or incorrectness of the verdict of a jury.

We are restricted entirely to the questions of law decided by the Court below. In this part of the case we have simply to decide the' narrow and technical question whether it was competent for the jury to take into consideration the evidence for the plaintiff in determining the issue of fraud. In this record there are thirty bills of exception. The last one contains the instructions of the Court to the jury, and presents the principal question in the case.

We have just stated our opinion %n it. The other twenty-nine exceptions were taken to rulings on questions of evidence. What'we have said indicates our general view of the case. We consider it necessary simply to say in addition, that after a careful examination of these exceptions, we discover no error.

The first and second instructions given by the Court on the prayer of the plaintiff below, were attacked by the appellant’s counsel with great force of argument and fertility of illustration. The criticism was ²²³ extremely ingenious and incisive. But giving to tbe language of these instructions its obvious and ordinary meaning, we think that they fairly placed before the jury the questions proper for their consideration, and it is difficult to suppose that they could have been misunderstood. (Decided 11th March, 1888.) Judgment affirmed.

On the 3rd of April, 1886, a motion for a re-hearing of this case was made by the appellant, and an elaborate brief was subsequently filed in support of the motion. The motion was overruled on the 24th of June, and the •following opinion was filed by Chief Judge Alvey : When this case was decided, after full argument, I concurred with the other Judges in the conclusion that the judgment of the Court below ought to be affirmed. This was my conclusion upon full examination of the record; it appearing that the case had been carefully tried and fully submitted to the jury upon correct principles of law. After the decision of the case in this Court, there was a motion by the appellant for re-argument; and, in support of that motion, quite an elaborate brief was filed, urging’ several matters and questions supposed to have been overlooked by the Court, or not fully considered by it, in arriving at the conclusion announced in its opinion.

That motion has been considered and overruled by the Court; and while I concur in overruling the motion for re-argument, I deem it due to the reasons assigned in support of that motion, to state briefly the grounds of my judgment. The contract, upon which the action was brought, contains the condition, that the quantity of coal to be furnished, during the three years for which the contract was to run, was to be of such quality as should be satisfactory to the masters of transportation and of machinery, who were employés and agents of the appellant, and to be ²²⁴ delivered into the tenders of the appellant’s locomotive engines, at such times as the appellant might require, &c. The contract was dated the 17th of May,' 1875, but was not to take effect until the 15th of July following. Goal had been delivered to the appellant by the appellee, from the same mine, from Sept., 1874, to the, time when the contract went into operation, but only under special.orders, and the appellant continued to receive coal from the appellee, from the same mine, and for the same purpose, that is, for generating steam for locomotive engines, until May the 6th, 1876, with occasional suspensions. “The appellee, in his declaration, assigned as breaches of the contract, 1st, that the appellant improperly refused to receive the coal tendered by the appellee; and 2dly, that though the appellee was ready and willing to deliver to the appellant daily the stipulated quantity of coal, of such quality as was required by the contract, and which in fairness and truth was, and should have been, satisfactory to the masters of transportation and of machinery of the appellant, the latter' falsely pretended that the coal thus offered to be delivered was not of the. quality contemplated by the contract, and was not satisfactory to the masters of transportation and of machinery, and therefore refused to accept such coal of the appellee.

I't was upon these alleged breaches of the contract that the issues were formed. Such then being the issues for trial, one of the most prominent questions of fact presented for the determination of the jury was, at what particular time did the master of transportation and the master of machinery really determine to condemn the coal supplied under the contract, because it was not satisfactory to them. On the part of the appellee it was contended, and sought to be maintained by his proof, that it was not until the 6th of May, 1876, that the appellant ceased accepting the coal under the contract, and that it was not then stopped because it was in truth unsatisfactory to the agents named, but because ²²⁵ of tbe fall in price of a superior grade of coal, and because those agents were unduly influenced by, and yielded to the dictation of their superior officers in the corporation, in disapproving the coal, so that their determination, in condemning the coal, was not in fact fairly and bona fide made. But while such was the contention on the part of the appellee, it was contended, and strongly supported by proof, on the part of the appellant, that the taking of the coal under the contract was stopped on the 3rd of August, 1815, because it was in fact unsatisfactory to the agents designated by the_ contract to pass upon its quality ; and that all the coal taken of the appellee after that date, was taken, as had been all the coal furnished by the appellee prior to the 15th of July, 1815, only occasionally, under special and limited arrangements, and for purposes of making tests as to the feasibility of using the coal on the i’oad.

No coal was in fact taken after the 6th of May, 1876, and the appellee immediately thereafter ceased operation of his mine, but he says that was in consequence of the refusal of the appellant to proceed with the execution of the contract. That term or condition of the contract which required the coal to be of a quality satisfactory to the agents designated, was certainly a leading and important one to the appellant, and was intended exclusively for its protection, and without which, we may suppose, the contract would never have been made. The appellant, therefore, had the right to insist that the condition should be allowed its full and complete effect, in determining the rights of the parties under the contract. In cases where it is stipulated that an article to be furnished shall, unqualifiedly, be satisfactory to the party to whom it is to be supplied, the right to reject the article, as