Crane Ice Cream Co. v. Terminal Freezing & Heating Co.

⁵⁹¹ Parke, J., delivered the opinion of the Court. The appellee and one W. 0. Frederick entered into a contract for the ‘delivery of ice by .the appellee to Frederick, and, before the expiration of the contract, Frederick executed an assignment of the contract to the appellant; ¡and on the refusal of the appellee to deliver ice to the assignee, it brought an action on the contract against the appellee to recover damages for the alleged breach. The common counts of-the declaration were abandoned, leaving -an amended special count on the contract ¡and assignment, to which.! a demurrer was filed and ¡sustained.

It is from ¡the judgment against the appellant on this demurrer that the appeal was taken. The demurrer admitted the following material allegar tions: At the execution of the contract, the 'Terminal Freezing and Heating Company, appellee, wias a corporation engaged in the manufacture and -sale of ice at wholesale within the State of Maryland, and William -0. Frederick made and sold ice cream in Baltimore, where has plant wasi located. The original contract between these two parties was made on April 2nd, 1911, and ran until April 2nd, 1920. -The contract was modified on June 3rd, 1918, by the increa.se of the original contract price of ice from $2.15 a ton to $3.25, and, before its expiration, the contract was renewed by the parties for another three years, so that the contract was continued until April 2nd, 1923, without change, save as to the higher-agreed cost of the ice delivered.

The contract imposed upon the appellee the liability to sell and deliver to Frederick such quantiti-ess of ice as he might use iu his business as an ice .cream manufacturer to the extent of two hundred and fifty tons per week, at and for the price of $3.25 a ton of two thousand pounds on the loading platform of Frederick. The contractual rights of the appellee were (a) to' be piaidl on every Tuesday, dtaiug the continuation of the contract, for all ice purchased by. Frederick during the week ending at midnight upon the next preceding Saturday; (ib) to require Frederick not to¡ buy or accept any ice from -any other source than the appellee, ⁵⁹² except in excess of the weekly maximum of -two- hundred and fifty tons; (c) to -annul the contract upon any violation of the agreement by Frederick; and (d) to sustain no liability for any breach of contract growing out of causes beyond its control. The converse of these rights and liabilities of the appellee were the correlative liabilities and rights of Frederick under the contract.

There w-as -a further provision .that the contract in its entirety should continue iu force from term to term, unless either party thereto gave to- the other party at leiast sixty days’ notice in writing; before the expiration of the term of the intention to- end the contract. The contract did not expressly permit or inhibit an assignment, but neither did it contain any word, such as assigns-, to indicate- that the parties contemplated an assignment by either. Before the firs-t year -o-f the second term of the contract . had expired, Frederick, without the -consent or knowledge of the ap-pellee, executed and delivered to- the -appellant, for a valuable consideration, a written assignment, dated February 15th, 1921,; of the modified agreement 'between him and the appe-lle-e. The attempted transfer of the contract was .a part -of the transaction between Frederick .and the appellant, whereby the appellant acquired by purchase the plant equip* ment, rights and credits-, cho-seis in -action, “go-o-d will, trade, ■custom, patronage-, rights-, contracts” and other as-sets -of Frederick’s ice cream business, which had been established and conducted -by him in Baltimore. 'The purchaser- took full pois-ses-si-on and continued th-a former business carried -on by Frederick.

It was then -and is now -a corporation “engaged in the ice cream business upon -a large -and extensive scale in the City -of Philadelphia, -as well as in the City of B-altimiore, -and State of Maryland,” -and had -a large capitalization, amp-le resource-si and credit, to meet -any of its -obligations, “and all -and .singular the- terms -and provisions” of the contract; .and it wais prepared to p-ay cash for -all ice deliverable under the contract. As soon as¡ the .appellee learned of this purporting -assign- ⁵⁹³ meat and the absorption of the business of Frederick by the appellant, it notified Frederick that the contract Was at an end, and declined -to deliver -any ice to the appellant. Until the day of the assignment the obligations of both original parties had been fully performed and discharged. It may be stated as .a general rule that a: contract cannot be enforced by or against a person who is not a party to it, but there are circumstaneeisi under which either -of the contracting- parties may substitute another for himself in the rights and duties -of the contract without obtaining the consent of the other party to the contract.

The inquiry here is whether the facta bring the ease within the scope of the g’enieral rule, and -the answer must be found from‘a -eonsid•eration iu detail of -the relation of the parties concerned, the subject matter of the contract., its terms, and the- circumstances of its formation. , . , The basic facts upon which the question for solution depends must be sought in the effect -of the attempted assignment of this executory bilateral contract on both the rights and the liabilities of -the contracting parties, -as every bilat•eral contract 'includes both rights and duties on each side while both sides remain -executory. 1 Williston on Gonirttcis, sec. 407. If the -assignment of rights and the assignment of duties by Frederick 'are -separa,ted, they fall into these t-wo divisions: (1) The rights of the'assignor were (a) to-take no ice, if the assignor used none in his business; but, if he did (b) to require the appellee to, -deliver, on the loading platform of the assignor, all the ice he might need in his business to the extent of twio hundred anid fifty tons a week; and (c) to buy any -ice he might need in excess of th-ei weekly two hundred -and fifty tons from any other persons; and (2) the liabilities of the -assignor were (.a) to. pay to the -appellee on every Tues-day -during the continuance .of -the contract the -stipulated price for all ice purchased and weighed by the assignor during the week ending -at midnight upon the next preceding 'Saturday, and (b) not, directly or indirectly, during the existence .of this agreement, to buy or accept any ice ⁵⁹⁴ from, any- otter person, firm, or corporation than the- said Terminal Freezing and Hmting Company, except such amounts as might he in excess of the weakly limit of two hundred and fifty tons. _■ Whether the attempted assignment of these rights, or the attempted delegation of these duties, must fail because the rights or duties are of too- personal a character is .a question of construction to be resolved from the nature of the contract and the express or presumed intention of the parties. Williston on Contracts, sec. 431. Tire contract was made by a corporation with .an individual, William 0.

Frederick, an ice cream manufacturer, with whom the corporation had dealt for three years; before it executed a renewal contract for a second like period. The character, credit, and resources of Frederick had been tried and tested by the appellee before it renewed the contract. Not only had his ability to pay as agreed been established, but his fidelity to Ms obligation not to buy or accept .any ice from any other source up to tvro hundred and fifty tons a week had been ascertained. In addition, the appellee had not asked in the beginning, nor on entering into, the second period of the contract, for Frederick to undertake to buy a specific quantity of ice; or even to- take any.

Ehederick simply engaged himself, during a definite term, to accept •.and pay for such quantities of ice as he might use in his business! to the extent of two hundred and fifty tons a week. If he used no ice in Ms business, he Was under no obligation to pay for a pound. In -any week, the quantity coulid vary from zero to two hundred and fifty tons, -and its weekly fluctuation, throughout the life of the contract, could irregularly range between these limito. The weeldy payment might be nothing or as much] a'a $812.50-; tod' for every wegk a credit was extended to the eigjhth -day from the beginning of every week’s delivery.' From the -time of the beginning of every weeldy delivery of the ice to the date of the payment • therefor, the title to» the ice was in the purchaser, and the •seller had no security for its payment except in the integrity ⁵⁹⁵ ■and solvency of Frederick.

The performances, therefore, were not concurrent, but the performance of .the non-assigning party to the contract was to precede .the payments by the ■assignor. When it is also considered that the ice was to be supplied .and paid for, according to its weight, on the loading platform of Frederick, ,at an unvarying price, without any reference either to the quantity used, or to the fluctuations in the cost ■of production, or to m(arket changes in the selling price, throughout three years, the conclusion is inevitable that the inducement, for the appellee to enter into the original contract and' into, the renewal lay outside ’the hare terms of the .contract, hut was implicit in them, and was the appel]ees reliance upon its. knowledge -of an average quantity of ice consumed, and probably to be needed, in the usual course' of Frederick’s business, .at all times throughout the year', and its confidence in the stability of his enterprise, in his competency in commercial .affairs, in his proibity, personal judgment, and in his continuing financial responsibility. The contract itself emphasized the personal equation by specifying that the ice was to be bought, for “use in his business as ;an ice cream maufacturer” and was to be paid for according to its weight “on the loading platform of the said W. 0. Frederick.” When Frederick went out of business as .an ice cream manufacturer, and turned over his plant and everything constituting his business to the .appellant, it Was no longer his business, or his loading, platform, or subject to his care, control or maintenance, but it was the business of .a stranger, whose skill, competency 'and requirements of ice were .-alto^ •gefher different from those of Frederick.

The assignor had his single plant in Baltimore. The assignee, in its purchase, simply added .another unit to its ice cream business, which it. had been, .and is now, carrying on “upon a large and extensive scale in the Oity of Philadelphia .and State of Pennsylvania., as well as in the Oity of Baltimore .and State of Maryland.” The .appellee knew that Frederick could not carry ⁵⁹⁶ on his business -without ice wherewith - to manufacture ice creain at his plant for Ms trade. It also Was fiaimiliar with the quantities of ice hie would require, from time to time, in his business at his plant in Baltimore; and it consequently eo-nld make its other commitments for ice with this knowledge as a basis. The, .appellant, on the other hand, might wholly supply its increased trade, acquired in the purchase -of Frederick’s business, with its ice cream produced upon a large and extensive scale by its manufactory in PhiladelpMa, which would result in no- ice being bought- by the assignee of the appellee, and s-O' the appellee would be deprived of the -benefit of its contract by the introduction of a different personal relation or element, wMch was never' contemplated by the original contracting parties.

Again, -should the price of -ice be relatively high in PhiladelpMa in comparison with the stipulated price, tlie assignee -could run -its business in Baltimore -and furnish its patrons, or a portion of them, in Philadelphia, with its product from the wieddy maximum consumption of two hundred and fifty tons- o-f ic-e throughout the year. There can be no denial that the uniform delivery o-f the maximum quantity of two hundred and fifty tons a week would be a eonsaquence not witMn the normal scope -of the -contract, and would impose a greater liability on the -appellee than was anticipated.. 7 Halsbury’s Laws of England, sec. 1015, p. 501. Moreover, the contract here to supply ice was undefined except as indicated from time to tome by -the personal requirements of Frederick in Ms specified -business. The quantities of ice to be supplied to Frederick to answer his weekly requirements must be very different from, ¡and would not be the measure of, the quantities- needed by Ms assignee, and, manifestly, to impose on thei seller the -obligation to -obey the demands of the substituted assignee is to -set up a n-ew measure of ice to be supplied and .so- a new term in the 'agreement that the appellee never hound itself to perform.

Up to two hundred -and fifty tons o-f ice a week, Frederick ⁵⁹⁷ engaged not to buy or