Penowa Coal Sales Co. v. Gibbs & Co.

Delaplaine, J., delivered the opinion of the Court. This suit was brought by Penowa Coal Sales Company, a Pennsylvania corporation, in the Superior Court of Baltimore City against Gibbs & Company, Inc., a Baltimore canner, and C. W. Hendley & Company, Inc., a Baltimore coal dealer. Plaintiff alleged in the declaration: (1) that on November 12, 1946, Hendley sold to Gibbs 327.85 tons of coal at $6.75 per ton, whereby Gibbs became indebted to Hendley in the amount of $2,212.99; (2) that on October 6, 1947, Hendley assigned to plaintiff its claim against Gibbs for the purchase price of the coal; and (3) that neither Gibbs nor Hendley has paid any of that amount. The coal had been purchased by Hendley from plaintiff for export to France; but, on account of delay in shipment due to labor difficulties, the coal did not arrive in Baltimore until November 30, 1946.

As the cargo vessel, on which Hendley had expected to ship the coal, had already started for Europe, Hendley sold the coal to Gibbs and delivered it by scow to Gibbs’ pier. As soon as the coal was tried in the boiler at the Gibbs plant, it caused trouble. George Roberts, the engineer, testified: “I had to shut down. That hit the canning process which means a good deal of steam, and it has to cook vegetables, and we could not generate enough steam, enough to ¹¹⁷ run the plant. * * * I got the superintendent of the plant to give me some extra men, and we tried by picking the stone * * * out of that coal.

We tried to burn it and they could not get satisfactory steam.” Oscar T. Sewell, vice president of Gibbs, immediately notified Hendley that the coal would not burn. Hendley notified plaintiff. Plaintiff dispatched its sales manager, W. W. Stone, to make an investigation. On December 8 Mr. Stone and William A. McLean, Hendley’s general manager, visited the Gibbs plant to inspect the coal.

As it appeared to be oxidized, they took several samples for chemical analysis. Mr. Stone warned the engineer not to use it unless he mixed it with other coal. Mr. McLean testified: “Mr. Stone and I recognized that due to the rocks that it had in it — foreign matter and rocks — it might do damage if it were burned by itself. * * * There were a couple of laborers working on the scow, and we agreed with Mr. Roberts that if those men could pick those rocks out, at least do that, and then upon getting it in the plant Mr. Roberts said that he thought that by mixing it with some other good coal he might be able to get rid of it.” Hendley thereupon delivered two carloads of high-grade coal to Gibbs. Some of the good coal was mixed with the bad, but even the mixture would not burn, because there was so much ash in the bad that it ruined the effect of the good.

The chemical analyses substantiated the supposition that the coal was oxidized and that its large moisture content made it unfit for fuel. Accordingly on December 19 Gibbs returned to Hendley the invoices unpaid. In explanation of this action, Vice President Sewell wrote: “As indicated to you by conversations and otherwise, it has been necessary for us to operate two boilers instead of one in order to hold our steam pressure. We have had to increase our force in our boiler room by four men and they have been working overtime ever since we have been endeavoring to use this extremely poor quality of coal.

Besides being poor quality, it runs very heavily in slate and stones.” ¹¹⁸ On October 6, 1947, Hendley, in settling another claim which plaintiff had brought against it, paid plaintiff $10,000 in cash and assigned to plaintiff all its right, title and interest in and to the money due and owing to it by Gibbs by reason of the sale of the coal in November, 1946. The Court, sitting without a jury, held that Gibbs had rightfully rejected the coal and had rescinded the contract. The Court accordingly entered judgment in favor of Gibbs. As to the claim against Hendley, the Court observed that, as the assignment of the claim against Gibbs warranted that no part of the purchase price of the coal had been paid, and that the amount due and owing had not been previously assigned, Hendley had committed a breach of warranty; but since plaintiff knew that there had been a controversy over Gibbs’ liability for the coal, and hence was not seriously damaged by the breach of warranty, it was entitled to only nominal damages.

The Court thereupon entered a judgment in favor of plaintiff against Hendley for the sum of $100. Pláintiff appealed from both judgments. First, as to the judgment in favor of Gibbs. It is undisputed that Gibbs, as soon as it tried the coal, complained to Hendley, and that Hendley immediately complained to plaintiff.

The evidence is convincing that the coal was unfit for fuel at the Gibbs canning plant. Mr. Sewell quoted Mr. McLean, Hendley’s general manager, as saying that the coal was worthless, and that he should have it hauled