Davison Chemical Co. v. Baugh Chemical Co.

Thomas, J., delivered the opinion of the ’Court. The appellee, the Baugh Chemical Company of Baltimore County, plaintiff below, is a corporation engaged in the manufacture of .acid phosphate, and its plant is located in Baltimore County, Maryland, and the appellant, the Davison Chemical Company of Baltimore County, is a corporation engaged in the manufacture of sulphuric acid, and its plant is also located in Baltimore County. The chief materials used in the' manufacture of acid phosphate, the product of plaintiff’s plant, are sulphuric acid and phosphate rock, and for a number of years prior to the year 1913, the plaintiff had purchased the sulphuric acid required in the manufacture of its acid phosphate from the defendant. Sulphuric acid is made from sulphur, and originally, or in the early days, the raw material employed in the manufacture of that acid was native sulphur or brimstone.

After the discovery of the sulphur bearing ore, called pyrites, containing! about fifty per cent, of sulphur, it became the raw material generally used in the manufacture of sulphuric acid, particularly the low grade of acid used in the making of acid phosphate. Just when this change from brimstone to pyrites took place ²⁰⁵ is not definitely fixed by the evidence in the case, but the lower Court in its opinion stated that it was between 1880 and 1890. The chief supply of pyrites was imported from Spain, the supply from the Canadian mines and mines in this country being very small and those mines were generally owned or controlled and their product consumed by companies engaged in the manufacture of acid or acid phosphate. In the early part of 1913, the plaintiff and defendant began negotiations for the purchase and sale of sulphuric acid, which resulted iu a contract executed by them the 28th day of April, 1913, by which the plaintiff purchased from the defendant from thirty thousand to fifty thousand tons, of two thousand pounds each, of sulphuric acid per year, of the quality designated “Chamber acid ranging from 50 degrees to 54 degrees.

Beaume,” to he delivered at the plaintiff’s works at Canton, or to Baugh & Sons Company, Norfolk, Virginia, for a period of five years beginning January 1st, 1913, and ending December 31st, 19.17, for the sum of $5.75 per torn. The contract provided that the plaintiff should declare on the 2nd of January of each year what amount in excess of the minimum amount of' thirty thousand tons it would take that year, and that the deliveries of sulphuric acid should be made as nearly as possible in equal weekly instalments^ and also contained the following provisions: “Fire, accident or strike, in the work of any of the parties heroin mentioned; obstruction to navigation, accident to acid, barges, war, insurrections or other uncontrollable causes rendering buyers unable to receive or sellers unable to deliver, shall be good and sufficient reasons to make this contract inoperative during the period of necessary repairs, reconstructions, or continuance of the difficulties.” Immediately following the execution. of the contract, the price fixed thereby was. by agreement reduced to $5.00' per ton. In pursuance of tbe provisions of the contract, the plaintiff elected to take fifty thousand tons of acid per year, and it appears that the deliveries of the acid were accordingly and regularly made by the defendant during the years 1913 and ²⁰⁶ 1914 and until sometime early in the year 1915. During the year 1915, the defendant failed to make full deliveries to the plaintiff, and in February, 1916, the plaintiff filed a bill in equity to compel the defendant to perform its contract.

The defense in that suit was that by reason of a breakdown in its plant, and other causes, the defendant had not been able to make full deliveries to the plaintiff and other parties to whom it had sold sulphuric acid, and that it was therefore compelled to' make a proportionate distribution of the product of its factory among them. In disposing, of the case on May 18th, 1916, Judge Bonn said that the evidence produced showed that there had been much interruption in the defendant’s factory, due to accidents and breakdowns in its plant during the year 1915, “and up to this, time,” which cut down its capacity to an “extraordinary extent”; that as the defendant’s contracto would have necessitated a full normal working of its plant, it was incapable by reason of such interruption of filling all of them; that the principle of “pro rating” should govern and determine the rights of the parties when the output is involuntarily reduced was in that case conceded; that the suspected improper preference of later buyers over the plaintiff had not been established by the evidence, and that he Would sign an order dismissing the petition for a preliminary injunction. The case was never pressed to a final hearing, and the bill was later dismissed by the plaintiff, and on the 10th of November, 1916, the plaintiff brought suit at law against the defendant to recover damages for the non-delivery of acid in accordance with its contract up- to and including June, 1916. Interference with the importation of pyrites caused by the war, and which had diminished the normal supply during the year 1915, had largely abated during the fall of 1916 and the early part of 1917, and by reason thereof, and the extra efforts made by the defendant in anticipation of difficulty in obtaining the ore, it had in March, 1917, accumulated at its plant about forty-eight thousand tons.

About that time, however, just preceding the entrance of this country into' the war, ²⁰⁷ the interference with navigation occasioned by the Gfcrman U-Boat campaign, became very serious. The companies with which the defendant had contracted for delivery of the ore, and whose contracts contained a clause similar to the clause in the contract between the plaintiff and the defendant which we have quoted, notified the defendant that they would be compelled to suspend deliveries. After receiving this notice, and after making efforts to secure further deliveries of ore from the parties with whom it had contracted and from other sources, the defendant notified the plaintiff and all others with whom it had contracts for delivery of sulphuric acid that after the exhaustion of its accumulated stock of pyrites it would not he able to make deliveries of the acid contracted for, and would have to take advantage of the clause in its contract with the plaintiff authorizing a suspension of deliveries. At the same time the defendant stated that it would continue its efforts to secure pyrites, and continue to deliver to them their proportion of acid from any pyrites that it might he able to obtain, and offered to install in its plant brimstone burners, and to furnish the plaintiff and other parties to whom it had contracted to furnish acid, with brimstone acid, provided they would agree to pay the increased cost of the brimstone acid delivered in lieu of acid made from pyrites.

All of the parties with whom the defendant contracted accepted the offer of the defendant and entered into agreements accordingly except the plaintiff, and on the 25th of September, 1917, the plaintiff filed in the Court below a bill of complaint against the defendant in which it prayed: “(a) That a decree may be passed commanding the said Davison Chemical Company of Baltimore County to specifically perform, keep and observe the several promises and agreements in the aforementioned contract set out to be performed, kept and observed, and commanding and directing the said defendant corporation, its officers, agents and servants, to make, during the time covered by said contract, the deliveries of acid to this plaintiff required by said contract. ²⁰⁸ “(&) That an injunction may, issue strictly enjoining and prohibiting the said Davison Chemical Company of Baltimore County, its and each of its officers, agents and servants, from delivering during the terms covered by its said contract with the plaintiff any sulphuric acid to any parties with which it has entered into contracts on or subsequent to May 7th, 1915, while said Davison Chemical Company of Baltimore County is in default as to the delivery of any part of the sulphuric acid to which this plaintiff is entitled under said contract. “(c) And that a preliminary injunction may issue strictly enjoining and prohibiting the said Davison Chemical Company of Baltimore County, its and each of its officers, agents and servants, from discriminating against the plaintiff in the distribution and delivery among its customers of the sulphuric acid manufactured by it from whatever raw material, and from withholding from this plaintiff any part of the fair and accurate .pro rata share of the sulphuric acid manufactured by it until the further order of this Court.” On the same day the Court passed an order directing a preliminary injunction to be issued requiring the defendant to “proceed forthwith to fulfill the contract betwieen the complainant and' the defendant dated the 28th day of April, 1913, in accordance with its terms,” and providing that “the deliveries be at the rate of 50,000 tons a year and that said deliveries be made weekly from this date, said deliveries to be made as nearly as possible in equal weekly installments of 961 tons each. Provided however, that if in each and any week commencing from the date of this order the defendant is unable to produce the entire output which it is normally capable of producing, or if for any justifiable cause the defendant is compelled to pro rate its weekly output among its customers, then the defendant may abate the number of tons furnished to the complainant in each week in the same proportion that the deliveries in such week to defendant’s ²⁰⁹ other customers are abated.” The order further required the defendant to “continue to make such deliveries until such contract is fulfilled, or until the further order” of the Court. The defendant answered the plaintiff’s bill and moved that the preliminary injunction be dissolved, and the testimony in this case was taken at the hearing of that motion. Upon the evidence produced at the hearing, and on the 3rd day of December, 1917, the Court- overruled the motion to- dissolve the injunction and, in accordance with the application of the plaintiff, modified its order of September 25th, 1917, granting the injunction to the extent of limiting the deliveries of sulphuric acid by the defendant to December 31st, 1917, or the further order of the Court.

Hothing further appears to have been done in the case until it was submitted for final decree upon bill, answer and evidence taken at the hearing of the motion to dissolve, and the parties having agreed that- after the issuing of the preliminary injunction on the 25th of September, 1917, and until December 31st, 1917, the defendant had delivered t-o the plaintiff sulphuric acid at the rate of 50,000 tons per annum, the Court passed the following decree from which this appeal was taken: “It is therefore, this 12th day of March, 1918, by the Circuit Court Ho. 2 of Baltimore City, adjudged, ordered and decreed, that the defendant under its contract With plaintiff and the evidence adduced was obliged to specifically perform and carry out said contract with plaintiff from the date of the filing of the bill on, and to deliver to plaintiff between September 25th, and December 31st, 1917, both inclusive, sulphuric acid at the rate of 50,000 tons a year and as nearly as possible in equal weekly installments of 961 tons each, irrespective of the raw material from which the said acid might be made; and that the injunction heretofore granted in this case on the 25th day of September, 1917, as modified by the order issued on the third day of December, 191,7, be and it hereby is made perpetual.” The defense relied on by the appellant is that under its contract with the plaintiff of April 28th, 1913, it was not ²¹⁰ required to deliver acid made from brimstone, and that as it was unable by reason of tbe war to obtain tbe necessary amount of pyrites to fulfill its contract with the plaintiff and other parties with whom it bad contracted to deliver acid or acid phosphate, it was entitled under tbe provision we have quoted to suspend tbe deliveries of acid to tbe plaintiff to the extent of its inability to secure pyrites. Tbe contention of the appellee is that tbe appellant was bound to deliver tbe acid to the amount specified in its contract, regardless of whether it was made from brimstone or pyrites, and, further, that tbe appellant by a proper effort could have obtained a sufficient amount of pyrites to enable it to comply with its contract. Tbe learned Court below took the view that by reason of tbe conflict in tbe testimony as to tbe meaning" of the words “chamber acid” the evidence produced by tbe defendant was not sufficient to establish a usage and to show that tbe trade meaning of tbe words “chamber acid” was acid produced from pyrites, and further held that tbe evidence showed that tbe defendant bad not exercised due diligence to secure sufficient pyrites to enable it to fulfill its contract with tbe plaintiff, and that it bad not made an effort to- procure acid from other manufacturers of acid for that purpose. Tbe effect of the preliminary injunction was to require tbe defendant during tbe period between tbe 25th of September and tbe 31st of December to supply tbe plaintiff with sulphuric acid made from brimstone or pyrites, at the rate of 50,000 tons a years, without regard to its ability to procure pyrites.

Tbe pleading's, exhibits and testimony in tbe case cover about eight hundred pages of tbe printed record. It would necessarily greatly prolong this opinion to undertake to dis-cuss this evidence, and we shall not attempt to- do more than state tbe conclusion we have reached after careful examination of it. It" is apparent that tbe first and important question in the case involves tbe construction of the contract between tbe plaintiff and defendant of April 28th, 1913. A large part of tbe evidence was offered for tbe purpose of showing tbe ²¹¹ meaning of the words, “chamber acid.” The witness produced by the plaintiff testified that they mean acid manufactured by the chamber process from either pyrites or brimstone, while the evidence offered by the defendant tends to show that at the time the contract of 1913 was executed they were generally understood by those engaged in the manufacture or sale of acid and acid phosphate to mean the low grade of acid manufactured from pyrites hy the chamber process.

The precise question, however, to be determined is, What is the meaning of the words “chamber acid” as used in the contract between the plaintiff and defendant ? In the ease of Saunders Co. v. Ducker, 116 Md. 474 , this Court said: “It is an established canon of construction that, ‘in order to arrive at the intention of the parties, the contract itself must he read in the light of the circumstances under which it was entered into. General or indefinite terms, employed in the contract may be thus explained or restricted as to their meaning or application; and the contract must he so construed as to give it such effect and none other as the parties intended at the time it was made.’ ” * *