Michlovitz & Co. v. Eastern Rolling Mill Co.

Sloan, J., delivered the opinion of the Court. These are cross appeals from the decree of the Circuit Court of Baltimore City on a supplemental bill filed by the plaintiff, Michlovitz & Company, a co-partnership, against The Eastern Rolling Mill Company, a corporation, praying the construction of a contract for the sale by the defendant to the plaintiff of its bundled scrap and its crop ends and the scale of prices to be paid for it during the life of a five year contract entered into as of the first day of October, 1927. The same contract was before this court on a hill for ⁴⁸⁸ specific performance filed by Michlovitz & Company, wbicb was resisted by the defendant on the ground that its general manager, L. J. Jones, had exceeded his authority in making the contract and that its terms were so unconscionable as to amount to a fraud on the defendant. This court, in an opinion by Judge Parke, in 157 Md. 51 , sustained the contract and affirmed the decree of the circuit court for specific performance.

One month from the date of the decision in the first appeal the plaintiff filed a petition alleging that the defendant had violated one of the provisions of the decree by selling fifty-eight and a half tons of crop ends scrap to the Van Allen Company, of Northumberland, Pa., and had refused to accept payment for the bundled scrap at the price fixed in the agreement for its sale by the defendant, and that it had demanded payment at a rate quoted by the “Iron Age” on a higher grade of bundled scrap, and prayed an order on the defendant to show cause why it should not be adjudged guilty of contempt of the decree of August 15th, 1928, which was the decree first appealed from, to which the defendant, after an order to show cause, answered. Before any action was taken on this petition, which was dismissed by order passed July 29th, 1929, as of the 5th day of June, 1929, the plaintiff, on June 7th, 1929, filed a supplemental bill wherein it prayed, (1) .a construction of the contract of September 30th, 1927, as to the proper method of ascertainment of the price to be paid each quarter for the defendant’s bundled steel scrap, (2) a definition of what croppings or cuttings from steel bars the plaintiff is entitled to receive from the defendant, and (3) an order restraining the defendant from refusing to accept payment on the basis of three dollars per ton less than the “Iron Age” quotations covering the Philadelphia market for bundled sheets (for steel works) and no other. In its answer and cross bill to the supplemental bill the defendant alleged that it was not bound by the single quotation in the “Iron Age” for the Philadelphia market of bundled sheets (for steel works), but that, beginning with the first quarter of 1929, the “Iron Age” no longer publishes a ⁴⁸⁹ single quotation for all bundled sheets for steel works, but publishes three quotations, two for hydraulically compressed sheets, new and old, and one (formerly applicable to hydraulically bundled sheets as well as hand bundled), applicable no longer to hydraulically compressed sheets, but now only to “hand bundled sheets”, and that since the addition of these quotations for hydraulically compressed sheets there should be applied, to the sheet steel scrap of the defendant furnished to the plaintiff, the quotations for hydraulically compressed bundled sheets, new or old, which run approximately from $3.00 to $4.00 more than the price for hand bundled sheets, and that, whatever form the package or bundle of the defendant took, there should be applied to it the current classification of the “Iron Age” for the Philadelphia market and that the plaintiff should pay accordingly. It appears that the plaintiff has made payments to the defendant at the rate of $8.25 per ton, which is in accordance with the quotations in the “Iron Age” prior to January, 1929, and is $3.00 less than the quotation for the Philadelphia market for bundled steel scrap, but that the plaintiff has refused to pay the balance of $3.15 per ton demanded by the defendant.

In its answer the defendant admitted that, in November and December, 1928, it had sold and shipped to the Van Allen. Company of Northumberland, Pa., about two hundred foils of cut sheet bars, but contends that these were not crop ends but full, usable lengths, ranging from thirty to fifty indies, which had been cut for manufacturing, had been accumulating for about three years, and before 1826 had been used as “warming-up steel,” and that the practice of so using them liad been discontinued in 1926 because of the, installation of electric roll heaters. The answer further stated that during the year 1928 3,000 tons of crop end scrap had been shipped to the plaintiff or on its order, and that the shipments of crop ends for 1929 were at a rate in excess of the 1928 shipments. After considerable testimony taken in open court, a decree was passed on the supplemental bill, wherein it was declared: (:0 That as to all shipments of bundled sheets for steel ⁴⁹⁰ works the plaintiff should pay the quoted prices applicable to such shipments less $3.00 per ton, and that, the defendant was not bound by the single quotation carried in the “Iron Age” for the Philadelphia market prior to January 31,1929; (2) that the bundled sheets shown in evidence delivered in the months of May, June, and July, 1929, were not in fact new or old hydraulically compressed sheets for steel works; (3) that according to the true construction of the contract the crop end scrap shipped to the Yan Allen Company was crop ends under the agreement between the plaintiff and defendant of September 30th, 1927; and (4) that the defendant should account to the plaintiff for the difference in price received from the Yan Allen Company and what the plaintiff would have been required to pay under its contract; (5) that the plaintiff is entitled to an additional deduction of $2.00 per ton from the quotation for bundled sheets for steel works on such quantity of steel as may be shown to have been thrown loosely into the several cars, the amount of which has not been, ascertained.

Considerable testimony was taken, the general effect of which was, on the part of the plaintiff, that although it has been buying thousands of tons of this product covering á period of six or seven years, the sheet steel scrap it received was so badly bundled as to be almost unfit for any kind of classification except loose scrap, and on the part of the defendant that it was so good it was entitled to receive the highest quotation in the “Iron Age” for new hydraulically compressed scrap. On the whole, our impression from the evidence is that the plaintiff has received substantially the same product from the defendant which the latter had been-furnishing prior to the contract of September 30th, 1927. The evidence does not show that the defendant has been habitually throwing appreciable quantities of loose scrap into any of the cars with the exception of one car, into which an employee had emptied a box of loose scrap, unknown to any of the officials of the defendant, because the employee had immediate use for the box. According to the evidence, such loose scrap brings a price of $2.00 less than the bun- ⁴⁹¹ died sheets, and the allowance to which the plaintiff would be entitled for such loose scrap found in the cars can be easily adjusted.

It appears from the evidence that the sheet steel cuttings or waste from the defendant’s mill is, and for several years lias been, hydraulically compressed into bundles, dumped into cars, and shipped to steel mills, where it is taken from the cars placed in a charging box (usually by means of a magnet), and from the charging box it is dumped into a furnace (o be rcmelted. Most of the defendant’s product has been sold by the plaintiff directly or indirectly to the .Bethlehem Steel Company at its Sparrows Point Mill, and, according to the testimony of Mr. Green, who does the purchasing for the Bethlehem Company, the bundling done by the defendant has been generally satisfactory. There were samples of bundling done by other mills offered in evidence, in comparison with which the defendant’s bundles suffered. The other bundles were all smaller and could be much more easily handled, being about one-half the weight of the defendant’s bundles.

As compared with the samples of other mills, however, Mr. Green’s testimony was that the defendant’s bundles did not require so many handlings, and were of considerably greater density than those with which they were compared, and that on the whole the Eastern Rolling Mill bundle was a better bundle for the purpose of such a mill as that at Sparrows Point than the smaller and neater bundles of some other concerns. But these questions do not enter into the construction of the contract before us. The plaintiff, for several years prior to the five-year contract of September 80th, 1927, had been buying the entire accumulation of sheet steel scrap from the defendant. It differed so in size from what has been testified to as the standard bundle that it became known among the customers of the plaintiff as “Eastern Rolling Mill” scrap, and had been so sold by the plaintiff, so that the subject matter of the contract between plaintiff and defendant was a distinct product, well known to both parties and was the thing about which they