Enterprise Manufacturing Co. v. Oppenheim, Oberndorf & Co.

Pearce, J., delivered the opinion of the Court. This suit was brought by The Enterprise Manufacturing Company, a corporation doing business in Augusta, Georgia, against Oppenheim, Oberndorf and Company, co-partners, of the City of Baltimore, claiming one hundred thousand dollars damages for the alleged breach of a contract for the purchase by defendants from the plaintiff of one million seven hundred and fifty thousand yards of cotton goods. The plaintiff owns and operates a cotton mill, and the goods it manufactures are known to the trade as “grey goods.” There is some sale for these goods as they come from the mill unbleached, but their principal and most extensive use is for printing and dyeing to be made up into various garments. Purchasers of these goods for the latter purpose, are known in the trade as “Converters,” and such purchasers ship such goods for that purpose to a “finishing mill” or “print mill,” usually somewhere in New England, and when thus “finished,” or “processed,” the goods are shipped to the purchaser or to his customers, who make them ³⁹¹ up into shirts or other garments.’ The defendants are both “converters,” selling the processed goods to other persons who are their customers, and also shirt manufacturers, doing a large business both in Baltimore and New York.

Woodward, Baldwin and Company are large dry goods commission merchants in Baltimore, who sell the products of many Southern cotton mills, and had for twenty-five years represented the plaintiff in that way, and they had during that period sold large quantities of plaintiff’s goods to the defendants. The contract sued on in this case was as follows: “Date, 7/15/—7. Sold to- Oppenheim, Oherndorf & Company, Baltimore Md., By W. B. & Co.:— Quantity, 1,750,000 yds. Grade, Plain sheetings, soft-twisted yarns.

To count, 52x44 picks to square inch. Weight, not lighter than 5 yards to pound. To be 36 inches wide. Cuts to run D. C. yards each.

Bales to contain yards. • Price, 5%. Terms, 2%, 10, 60 ex. Delivery, 350,000 yds., monthly, equal weekly, Nov, Dec., ’07, Jny., Feb., Mch., ’08. Freight prepaid to Blchy.

Shipping directions Later. Accepted, seller . Accepted, buyer, S. Baldwin, Jr. O. O. & Co." (Record, page 36.) And in executing it, Woodward', Baldwin and Company acted for the plaintiff, their undisclosed principal. The declaration contained the common counts, and a special count setting out the contract.

This count alleged that defendants actually received and accepted from the plaintiff 350,195 yards of the goods manufactured for them.and had ³⁹² paid on account thereof $10,371.45, leaving a balance due thereon of $9,791.04. It then alleged that on December 21. 1907, the original contract was' modified by providing that deliveries should not begin until January, 1908, and that the monthly deliveries should be reduced from 350,000 to 250,000; that in accordance with such modification, it manufactured the further quantity of 1,045,648 yards of said goods, and tendered the sanie at the proper times to the defendants, who refused to accept or pay for the same, and on December 23, 1907, notified the plaintiff that they rescinded said contract, whereupon the plaintiff discontinued the manufacture of goods under the contract though ready and willing to perform said contract, and though it had incurred large expense in preparing to do so. It then alleged there was due the plaintiff the full contract price for the goods manufactured and tendered as above stated, in addition to the balance of $9,791.04 for the goods delivered, and also a large sum for profits lost by reason of the cancellation of said contract. The defendants pleaded the general issue, and a special plea of set off, alleging a breach of the same contract by the plaintiff in the delivery of several instalments of goods, not “firsts” such as the defendants had contracted for. and not proper' or merchantable goods under said contract, but which the defendants paid for assuming that they would be proper deliveries under said contract, and without having had an opportunity, in the reasonable conduct of their business, to inspect said-goods or to discover the defects which were disclosed when examined, but that as soon as these defects were discovered they cancelled said contract and demanded payment of the loss sustained by reason of said improper deliveries, to the amount of $15,000.

The issues were properly joined on all the pleadings, and at the close of the testimony which was voluminous, the plaintiff offered six prayers, and the defendants offered eleven. The Oourt rejected all the plaintiff’s prayers, and also rejected the de ³⁹³ fendants’ tenth and eleventh prayers which were based upon their plea of counter-claim or set-off, and granted the defendant’s first prayer, that under the pleadings there was no evidence legally sufficient to entitle the plaintiff to recover, and therefore their verdict must be for the defendant. The modification of the original contract was brought about in this way. That was made in July, '1907, when the market for “grey goods” was steady and prices firm.

In October, 1907, a financial panic was impending, threatening general disaster, and especially to those interested' on a large scale in the manufacture and conversion of cotton goods. The defendants had at that time, numerous contracts similar to the present, many of which were made through Woodward, Baldwin & Conrpany, who were familiar' with existing market conditions. Sometime in November, Mr. Oppenheim informed Woodward, Baldwin & Company that his customers all over the country were cancelling their contracts and that it would be a great hardship for him to have to take that lot of goods according to the original deliveries, and requested them to endeavor to arrange for an extension of deliveries, or if possible for buying out the contract. They took up this matter with the plaintiff, and failing to secure the buying out of the contract, endeavored to have the monthly deliveries cut in half, but failed in this also.

The plaintiff, while declining this proposition, offered “to hold back twenty per cent, of monthly deliveries until times become normal again. This is the best we can d'o to help buyer.” This was not satisfactory to defendants, and Woodward, Baldwin & Company so wrote the plaintiff, saying: “We ourselves know that we cannot afford to crowd him, and are quite sure if you were on the spot that you would feel as we do. We are satisfied you will d'o everything to alleviate this position which is possible.” This was on December 11th, 1907. On the 17th of December plaintiff offered to make no delivery for December and thereafter to ³⁹⁴ deliver monthly 250,000 yards until the contract was completed, and on December 21, 1907, defendants accepted this modification, and on the same day Woodward, Baldwin & Company so notified plaintiff by letter, “thanking them for the accommodation.” It will be noted that the-modification thus made had exclusive reference to the extension of time and reduction in quantity of monthly deliveries, and left the ■ character of goods the same, though by a previous agreement, the width of the good’s had been changed from 36 to 37 inches, the weight per yard remaining the same, and the price changed from 5% cents to 5% cents per yard.

The negotiations for the final modification of the contract were conducted on all sides in the broad and liberal spirit which characterises the conduct of men accustomed' to deal in large transactions, and mindful of the wisdom of mutual concessions in time of financial stringency or panic. On October 1st, 1907, before the approaching panic had been taken into account by the parties, the defendants gave shipping instructions to the plaintiff directing the first weekly instalment of goods to The Southbridge Printing Oo., Mass., and the balance, until otherwise instructed, to S. H. Green & Son, Clyde, R. I.; but later, about October 12th, .they were instructed to ship first instalment also to S. H. Green & Son. On November 2nd, these instructions were revoked until further notice. In the meantime, however, on October 25th, 1907, an invoice of 79,771 yards had been shipped as ordered to S. H. Green & Son.

Three invoices were ready for shipment, on November 5th, 12th and 20th, respectively, but were held for shipping instructions. On November 22nd, the invoice of November 5th, 65,920 yard's, was ordered shipped to the IT. S. Finishing Oo., Pawtucket, R. I., and arrived there about December 5th. On the 27th, the invoice of November 12th, 51,462 yards was also ordered to Providence, R. I., and was received in the print mill on December 23, 1907, and on the 27th also the invoice of November ³⁹⁵ 20tli, 62,756 yards, was ordered' shipped to Pawtucket and was received and put into process about December 13th.

Prior to December 23rd, 1907, when defendants cancelled the contract, a fifth instalment had been invoiced to defendants, but never left Augusta, for want of shipping instructions. The record of goods invoiced therefore stands thus: “(1) Oct. 25th, 1907, 79,771 yds. $4,592.82, shipped Oct. 25th to S. H. Green & Son. (2) Nov. 5th, 1907, 65,920 yds. $3,795.34, shipped Nov. 25th to U. S. Finishing Co. (3) Nov. 12th, 1907, 51,462 yds. $2,962.92, shipped Nov. 30th to U. S. Finishing Oo. (4) Nov. 20th, 1907, 62,756 yds. $3,613.18, shipped Nov. 30th to IJ.

S. Finishing Oo. (5) Nov. 30th, 1907, 90,286 yds. $5,198.22, never left Augusta.” The second, third and fourth instalments were converted and have been paid for. The first was never converted and was held subject to plaintiff’s disposal, and the fifth remaining at Augusta was embraced in the cancellation. There was never any complaint as to the grade of the goods, viz.: “Plain sheetings, soft-twisted yarns”—none as to the number of strands to the square inch either in the warps or in the filling—none as to the width of the sheeting, nor as to the number of yards to the pound—none as to the making up in double cuts.

It is conceded that the contract in question called for what are known as “firsts” in the trade, “seconds” never being deliverable unless specified in the contract. They not only sell for less than “firsts” but they are unfit for converting and for making shirts, and are never used for that purpose. But in weaving such goods as those in question various imperfections sometimes occur. These imperfections are variously described in the testimony as “run threads,” or ³⁹⁶ “drop threads,” “thick and thin places,” “misweaves,” “knot-' ted filling,” “scratch ups,” “holes” and “oil stains.” A drop thread is a broken thread not caught up, and leaving a vacancy in the cloth. “Thick and thin places” speak for themselves, places where the uniformity of the body of the cloth is not preserved and the goods are humpy and uneven.

These may all be classed as misweaves generally. “Knotted filling” leaves kinks in the cloth. “Scratch ups” is one of ’the most serious defects and is described by Mr. Verdery, the plaintiff’s president, to be “a break of several threads and the weaver tries to pull them together again with a little comb.” He said that was one of the most serious defects when the goods go to the bleachery for printing; that two or three such “scratch ups” in a piece of 50 or 60 yards would justify throwing it out as “seconds;” and that this was true also of misweaves, loose threads, thick and thin places, and oil stains. Otis G. Lynch, a former superintendent of the plaintiff testified that “scratch ups” ought not to be found in “firsts,” and if found in any quantities the goods were “seconds;” that there was no fixed percentage of defects which would render goods “seconds,” and that “the mills were not expected to put up any bad goods.” Eor the protection both of the manufacturer and the purchaser, and especially where the goods are for conversion, a careful system of inspection for defects in these grey goods is necessary at the mills when and as they are made, and according to all the testimony, when the goods are to go to a converter from the manufacturer, this is the only inspection practicable; the converter never makes an inspection before processing the goods, unless specially ordered by the purchaser, or unless upon opening the bales, defects are discovered so numerous and serious as to require notice to be given to the purchaser. The mills provide inspectors for that purpose. When the goods come from the looms, they go ³⁹⁷ to the brasher, and from him to the measurer, and they are made into cuts, single or double as may be required.

The bolts áre then