1. Written orders for goods, addressed to a sugar refiner, and
written acceptances by the latter, compared and construed in the
light of the parties' conduct, and
held free from
variances alleged to prevent their forming completed contracts. P.
267 U. S.
235.
2. In construing a typewritten document, a mistake of the typist
by transferring the concluding clause of one sentence to the
beginning of the next, thus altering the literal meaning, may be
corrected to conform to the context and the sense of the whole and
to the conduct of the parties. P.
267 U. S.
236.
3. Section 4 of the Act of August 10, 1917, amended October 22,
1919, known as the Lever Act, which provides that "it shall be
unlawful for any person willfully . . . to make any unjust or
unreasonable . . . charge in . . . dealing in or with any
necessaries," or to agree with another "to exact excessive prices
for
Page 267 U. S. 234
any necessaries," and which has been adjudged violative of the
due process clause of the Fifth Amendment as applied to criminal
prosecutions (
United States v. Cohen Grocery Co.
255 U. S. 109), is
likewise invalid as a test of the validity of a contract for the
sale of a commodity (
e.g., sugar), because, in either
case, the standard of duty set up is so vague and indefinite as
really to be no rule or standard at all.
Levy Leasing Co. v.
Siegel, 258 U. S. 242,
distinguished. P.
267 U. S.
237.
4. Section 5 of the Lever Act did not invest the President with
general authority to fix the profit which might be taken on sales
of sugar, but only with special authority, on finding that a
licensee was taking an unreasonable profit, to require that such
practice on the part of the licensee be discontinued and to
determine what was a reasonable profit to be taken in place of the
one condemned. P.
267 U. S.
242.
5. Section 6 of the Lever Act, though prohibiting willful
hoarding and also certain acts done for the purpose of unreasonably
increasing or diminishing prices, did not prohibit a selling for
delivery more than 30 days in the future. P.
267 U. S.
243.
6. The duty of a seller, upon retaking goods for sale on the
buyer's account, is to make the resale fairly in a reasonably
diligent effort to obtain a good price. P.
267 U. S.
244.
7. Evidence on the part of the buyer of particular sales of like
goods by others at higher prices than that obtained by the seller's
resale of the goods in question
held rightly excluded from
the jury both because the seller was not obliged to obtain the best
price possible and because the other sales, due to circumstances
disclosed, did not tend to establish a standard by which the
fairness of the resale could be judged.
Id.
8. The duty of a seller to resell goods under a vendor's lien
does not arise until he takes possession under it, and the
reasonable time permitted for reselling does not begin to run until
then. P.
267 U. S.
246.
Affirmed.
Error to a judgment of the district court recovered by the
plaintiff in an action upon two contracts for the sale of sugar,
which the defendant broke by refusing to accept the sugar when
delivered.
Page 267 U. S. 235
MR. JUSTICE VAN DEVANTER delivered the opinion of the Court.
This was an action to recover for the breach of two contracts
for the sale by a sugar refiner to a wholesale dealer of 35,000
pounds of refined sugar, the breach consisting in the buyer's
refusal to accept the sugar when delivered. The plaintiff secured a
verdict and judgment in the district court, and the defendant
prosecutes this direct writ of error, a constitutional question,
among others, being involved.
The contracts were alleged to have arisen out of written orders
from the wholesale dealer and written acceptances by the refiner.
Whether the acceptances conformed to the orders, and so resulted in
contracts, was questioned by a demurrer to the petition, and also
at the trial, and is the first matter presented by the assignments
of error. The defendant asserts that there was a material variance
in three particulars. One is that the orders contained no
designation of the place from which the sugar was to be shipped,
while the acceptances named New Orleans as the place. This closely
approaches a mere quibble. The orders were addressed to the refiner
at New Orleans, and expressly gave it an option to ship from any of
its refineries, one of which was at New Orleans. So, in naming that
place as the one from which shipment would be made, the acceptances
were in accord with the orders. Another asserted difference is that
the orders fixed one price for the sugar, while the acceptances
fixed another price. This is equally without substance. In the
acceptances, the basis on which the price was calculated was
described a little differently from what it was in the orders, but
there was
Page 267 U. S. 236
no difference in meaning. Besides, the price calculated on the
indicated basis was set out in the price column in the orders and
in the acceptances, and was the same in both. Lastly, it is said
that the orders gave the refiner a conditional right to supply such
grades of sugar as it might have available at the time of shipment,
while the acceptances omitted the words of condition and made the
right absolute. This point, although having more color than the
other two, must fail for reasons which will be stated.
The orders and acceptances were both prepared by the refiner --
a circumstance strongly suggesting they were intended to be in
accord. After the acceptances were given, both parties in several
ways affirmatively treated the orders as effectively accepted. Not
until this action was brought was a variance suggested. In such
circumstances, a court should be solicitous to find, as the parties
evidently did before they became hostile, an accord between the two
instruments.
The orders were given in July, 1920, and called for shipment of
the sugar during September of that year. They set forth carefully
the assortment of packages and grades of sugar desired, with the
particular price of each, and then said:
"Barrels or equivalent at price of 22 1/2 cents, assortment to
be furnished seller by buyer before September 1, 1920, but subject
to such substitutions as seller may find necessary to make. In
event assortment is not furnished prompt, seller reserves right to
ship such grades as it has available at the time of shipment."
The acceptances set forth the assortment of packages and grades,
with prices, in the same way, and then said: "Seller reserves right
to ship such grades as it has available at the time of
shipment."
This provision in the acceptances is well constructed, and can
have but one meaning. But not so of the provision quoted from the
orders. In any view, it is neither grammatical
Page 267 U. S. 237
nor rightly punctuated. It was typewritten, and probably was
prepared with the idea that the assortment of packages and grades
would not be embodied in the orders, but would be furnished by the
buyer later on. In fact, as just shown, the assortment was set
forth in the orders. But, putting this aside, the context and the
sense of the whole provision indicate that the clause "in event
assortment is not furnished prompt" was intended to be a part of
and to qualify what precedes it, rather than what follows. If that
was the meaning intended, a mistake in punctuation by the typist
should not be permitted to defeat it.
Ewing v.
Burnet, 11 Pet. 41,
36 U. S. 54;
Hammock v. Farmers' Loan & Trust Co., 105 U. S.
77,
105 U. S. 84.
The parties evidently treated it as the true meaning when the
orders and acceptances were given, for their acts already recited
have no other explanation. There is ample warrant, therefore, for
regarding the full provision as reading:
"Barrels or equivalent at price of 22 1/2 cents. Assortment to
be furnished seller by buyer before September 1, 1920, but subject
to such substitutions as seller may find necessary to make in event
assortment is not furnished promptly. Seller reserves right to ship
such grades as it has available at the time of shipment."
In this view, the orders and acceptances contained the same
reservation of a right to ship available grades. A like conclusion
in a like situation was reached by the Circuit Court of Appeals for
the Fifth Circuit in
American Sugar Refining Co. v. Newman
Grocery Co., 284 F. 835.
To avoid any misapprehension, it is well to state at this point
that, in fact, the refiner delivered the assortment of packages and
grades specified in the orders and repeated in the acceptances.
In its answer, the defendant set up two defenses expressly based
on the Lever Act of August 10, 1917, c. 53, 40 Stat. 276, §§ 1, 4,
as amended by the Act of October 22, 1919, c. 80, 41 Stat. 297, §§
1, 2, and on orders and regulations made thereunder.
Page 267 U. S. 238
One defense was to the effect that the plaintiff was not
entitled to "more than one cent per pound profit on what the sugar
cost, which was the
prima facie reasonable profit fixed by
the president," and in no event was entitled to "more than a
reasonable profit." The other defense was to the effect that the
contracts were unlawful because they provided for delivery at a
future time, more than thirty days away, and thereby "tended to
increase the price of sugar and to promote the hoarding thereof."
Each of these defenses was challenged by a demurrer on the grounds:
first, that the facts alleged were not sufficient to constitute a
defense under the Lever Act, and secondly that that Act was in
conflict with the Fifth Amendment to the Constitution, and void.
The demurrers were sustained on the second ground, and the
defendant assigns error on that ruling.
As the Lever Act is a long one with various provisions, we
assume that the district court's ruling was confined to certain
provisions in §§ 4, 5, and 6, for they are all that could have any
bearing. Section 25, mentioned in the briefs, related only to coal
and coke. Section 1, likewise mentioned, provided for the issue of
regulations and orders to carry out other sections, but did not
alter or enlarge their prohibitions or requirements.
Section 4 provided it should be "unlawful for any person
willfully . . . to make any unjust or unreasonable . . . charge in
. . . dealing in or with any necessaries," or to agree with another
"to exact excessive prices for any necessaries." In a series of
cases, of which
United States v. Cohen Grocery Co.,
255 U. S. 81, and
Weeds Inc. v. United States, 255 U.
S. 109, are examples, this Court held that provision
invalid as contravening the due process of law clause of the Fifth
Amendment, among others, because it required that the transactions
named should conform to a rule or standard which was so vague and
indefinite that no one could know what
Page 267 U. S. 239
it was. By copious references to judicial pronouncements and
proceedings, the court illustrated that the terms "unjust,"
"unreasonable," and "excessive," as applied to prices by that
provision, had no commonly recognized or accepted meaning. The
ground of the decision is reflected by the following excerpt from
the opinion in the first case (255 U.S.
255 U. S.
89):
"Observe that the section forbids no specific or definite act.
It confines the subject matter of the investigation which it
authorizes [by court and jury after the act] to no element
essentially inhering in the transaction as to which it provides. It
leaves open, therefore, the widest conceivable inquiry, the scope
of which no one can foresee and the result of which no one can
foreshadow or adequately guard against. In fact, we see no reason
to doubt the soundness of the observation of the court below in its
opinion to the effect that, to attempt to enforce the section would
be the exact equivalent of an effort to carry out a statute which
in terms merely penalized and punished all acts detrimental to the
public interest when unjust and unreasonable in the estimation of
the court and jury."
The defendant attempts to distinguish those cases because they
were criminal prosecutions. But that is not an adequate
distinction. The ground or principle of the decisions was not such
as to be applicable only to criminal prosecutions. It was not the
criminal penalty that was held invalid, but the exaction of
obedience to a rule or standard which was so vague and indefinite
as really to be no rule or standard at all. Any other means of
exaction, such as declaring the transaction unlawful or stripping a
participant of his rights under it, was equally within the
principle of those cases. They have been so construed and applied
by other courts in civil proceedings.
Standard Chemicals, etc.,
Corp. v. Waugh Chemical Corporation, 231 N.Y. 51, 54;
Dunman v. South Texas Lumber Co., 252 S.W. 274, 275. In
the first of these citations, the
Page 267 U. S. 240
Court of Appeals of New York, referring to this Court's ruling
in the
Cohen Grocery Co. case, well said:
"The ground on which it placed its judgment applies, and with
like consequences, to civil suits as well. The prohibition was
declared a nullity, because too vague to be intelligible. No
standard of duty had been established. . . . The variant views of
judges of the district courts were quoted as evidence of the
absence of a standard. If this is the rationale of the decision,
its consequences are not limited to criminal prosecutions. A
prohibition so indefinite as to be unintelligible is not a
prohibition by which conduct can be governed. It is not a rule at
all; it is merely exhortation and entreaty."
In
Levy Leasing Co. v. Siegel, 258 U.
S. 242,
258 U. S. 250, a
civil case arising out of the wartime rent law of the State of New
York, this Court referred to the
Cohen Grocery Co. case as
"dealing with definitions of crime," and declared it "not
applicable." This brief reference is now pressed on our attention,
special emphasis being laid on the words "dealing with definitions
of crime." We appreciate their import, but must recognize that they
do not adequately reflect the matter dealt with. As already shown,
it was broader than they indicate, and, of course, they were not
intended to qualify or limit the decision. The important part of
the reference was the declaration that the decision was not
applicable to the case then under consideration. The
inapplicability resulted from a material difference between the
cases. One dealt with a federal statute prohibiting the sale of
sugar at unjust, unreasonable, and excessive prices, and the other
with a state statute directed against reserving unjust,
unreasonable, and oppressive rent in the leasing of real property
in a city for dwelling purposes.
The federal statute contained no provision pointing to what
should be deemed a just, reasonable, and not excessive price, and
there was no accepted and fairly stable
Page 267 U. S. 241
commercial standard which could be regarded as impliedly taken
up and adopted by the statute, as this Court construed it. While
sugar has a market value, that value is subject to fluctuations
which individual manufacturers and dealers can neither control nor
readily foresee. The price in one trade center is affected by that
in others, and in all there are material variations, even in short
periods. The tendency to vary is illustrated in the present record,
which shows that the price advanced in the early part of 1920,
reaching 26 cents a pound in June, then remained steady for a month
or two, and then declined irregularly to about eight cents.
The New York statute was not silent as to what should be deemed
a just, reasonable, and unoppressive reservation of rent. It
recognized and named elements which would require consideration,
and the state court construed it as prescribing a standard "which
permitted the landlord to receive a reasonable income on his
investment," valued as of the time when the rent was reserved.
Levy Leasing Co. v. Siegel, 194 App.Div. 482, 506, s. c.
230 N.Y. 634. So, when the case came here, the question presented
in this connection was whether that standard was sufficiently
definite to satisfy the requirement of due process of law in the
Fourteenth Amendment. This Court held that it was. Real property,
particularly in a city, comes to have a recognized value which is
relatively stable and easily ascertained. It also comes to have a
recognized rental value -- the measure of compensation commonly
asked and paid for its occupancy and use the amount being fixed
with due regard to what is just and reasonable between landlord and
tenant in view of the value of the property and the outlay which
the owner must make for taxes and other current charges. These are
matters which in the course of business come to be fairly well
settled and understood. A standard thus developed and accepted in
actual practice, when made the
Page 267 U. S. 242
test of compliance with legislative commands or prohibitions,
usually meets the requirement of due process of law in point of
being sufficiently definite and intelligible.
The difference which we have pointed out between the two
statutes and between the matters sought to be regulated by them
made it obvious that the decision on the validity of one statute
had no bearing on the question of the validity of the other.
As § 4 was invalid, whether taken as a civil regulation or as a
criminal statute, it follows that, insofar as the special defenses
were based on it, the demurrers were rightly sustained.
Section 5 was not dependent on § 4; nor did this Court consider
its validity along with that of § 4. For present purposes, it may
be described as (a) providing for the licensing of transactions in
necessaries, including the manufacture, refining, distribution, and
sale of sugar; (b) as declaring that the president, on finding that
any licensee was taking an unreasonable profit, might, by an order
reciting his finding, require such licensee to discontinue taking
the unreasonable profit, and might also determine what was a
reasonable profit to be taken in lieu of the one found
unreasonable, and (c) as providing that, "in any proceedings
brought in any court, such order of the president shall be
prima facie evidence."
It is apparent that the section did not invest the president
with general authority to fix the profit which might be taken on
sales of sugar, but only with special authority, on finding that a
licensee was taking an unreasonable profit, to require that such
practice on the part of the licensee be discontinued, and to
determine what was a reasonable profit to be taken in place of the
one condemned.
The special defenses, while showing that the plaintiff was
licensed to manufacture, refine, and sell sugar, contained no
allegation that the president had found that the
Page 267 U. S. 243
plaintiff, in selling its sugar, was taking an unreasonable
profit, nor any allegation of an order by the president requiring
it to discontinue such a practice. Of course, the special defenses
could not derive any support from that section when there had been
no action by the president under it.
One of the special defenses speaks of the president's having
fixed one cent per pound as the profit which might be taken. But
the reference is to an administrative regulation [
Footnote 1] which had no application to sales
by a manufacturer or refiner to a wholesale dealer, such as are in
question here. Besides, that regulation was revoked May 31, 1919,
before these contracts were made. There was an administrative
regulation [
Footnote 2]
applicable to manufacturers and refiners which restricted them to
taking not more than a fair and reasonable advance over cost; but
this regulation was revoked January 26, 1919, before the contracts
were made.
The allegation that the contracts called for a delivery more
than thirty days in the future, and therefore were unlawful as
tending to increase the price and promote hoarding, was of no legal
effect. While § 6 prohibited willful hoarding, and also certain
acts done for the purpose of unreasonably increasing or diminishing
the price, it did not prohibit a selling for delivery more than
thirty days in the future. Nor did the special defenses set forth
any facts which could be regarded as bringing the contracts within
any prohibition of that section. Not improbably, the pleader had in
mind an administrative regulation [
Footnote 3] applicable to manufacturers and refiners which
forbade making contracts of sale under which
Page 267 U. S. 244
shipment was not to be made within thirty days. But no support
can be derived from that regulation, for it was revoked January 26,
1919, prior to the making of these contracts.
Insofar therefore as the special defenses were based on §§ 5 and
6 and the regulations cited, the demurrers were rightly sustained,
and this regardless of any question respecting the validity of
either of those sections or of any of the regulations.
A short statement of the case shown by the evidence, insofar it
is embodied in the record, will give a better understanding of the
remaining questions.
By the contracts, made in July, 1920, the plaintiff agreed to
deliver the sugar to a carrier at New Orleans during September, or
soon thereafter, for shipment to the defendant at Macon, Georgia,
and the defendant agreed to accept delivery to the carrier, to pay
the contract price, and to bear the carrier's charges. In August,
the market price of sugar took a downward turn, and continued to
decline to the end of that year. In September, the plaintiff made
the delivery to the carrier as agreed, and in due course the sugar
reached Macon. The defendant then refused to accept it, and wrote
to the plaintiff saying:
"For the good of whom it may concern, we suggest that this
carload of sugar be stored to save any additional cost (demurrage,
etc.) against whoever might be affected."
The storage was effected as suggested with a Macon warehouseman,
but was intended to be only temporary. Much correspondence ensued,
the defendant repeating its refusal to take the sugar and the
plaintiff insisting the defendant was bound to take it and to bear
the carrier's charges, etc. Finally, on November 30, the plaintiff
sent to the defendant a notice saying:
"As you have continued to refuse to take this shipment, we must
now inform you that unless you accept and pay for same at once, we
will resell this sugar for your account. When resale is made,
Page 267 U. S. 245
we will require you to remit the difference between contract
price and price received on resale, as well as for all freight,
storage and other charges incurred."
The defendant made no answer. The plaintiff then paid the
several charges, took possession of the sugar, and resold it in and
around Macon, the last portion being sold December 20. There was an
oversupply of sugar in the hands of wholesale dealers and others in
that vicinity at the time, which made it difficult to effect a
resale. But the plaintiff made an active and honest effort to make
a fair sale, and succeeded in obtaining the full market price
prevailing in larger markets, plus the freight to Macon. The total
amount realized, less storage and other charges not questioned, was
$2,963.04. With this sum credited on the contract price, there
remained a balance of $5,111.70, which was demanded in the first
count of the plaintiff's petition.
On the trial, the defendant sought to prove by jobbers and
dealers in Macon that the price of sugar at Macon was higher in
October and November than in December, and that, in December,
particular sales were made at a higher rate than the plaintiff
obtained on the resale -- the purpose in offering this testimony
being to discredit the fairness of the resale by the plaintiff. A
preliminary examination of the witnesses disclosed that the market
at Macon was greatly demoralized during that period; that jobbers
and dealers were selling for what they could get, regardless of
cost, lest they might lose more through a further decline; that the
buying was in relatively small quantities, and was on what was
termed a "hand to mouth" plane, and that the particular sales in
December were of such a character that they would shed no light on
the fairness of the resale. On the plaintiff's objection, the court
refused to permit the proffered testimony to go to the jury.
Complaint is made of this ruling. In our opinion, it constitutes no
ground for a reversal. There were
Page 267 U. S. 246
obvious infirmities in what was proposed to be shown about the
market price in October and November, but we need not dwell on
them, because, as will be explained later on, the state of the
market in those months came to be quite immaterial. What was
proposed to be shown about particular sales in December was rightly
excluded. The sales were of a kind that did not tend to establish a
standard by which to judge the plaintiff's resale. Besides, the
real question was not whether the plaintiff got the best possible
price, or as much as others got in special instances, but whether
the resale was fairly made in a reasonably diligent effort to
obtain a good price. To have admitted the proffered testimony would
have tended to confuse and mislead the jury.
At the trial, the plaintiff took the position that, when it
delivered the sugar to the carrier at New Orleans, its obligation
under the contracts was fully performed, and it became entitled to
the contract price; that it could then have abandoned the sugar,
but was not obliged to do so; that it had a vendor's lien thereon
which could be availed of at any time before the sugar passed into
the actual possession of the defendant; that it could realize on
the lien by retaking the sugar, and, after notice to the defendant,
reselling the same for the latter's account and crediting the net
proceeds on the contract price, and that it could recover the
balance from the defendant. The district court, in dealing with the
first count of the petition, charged the jury to that effect,
evidently believing it was conforming to Georgia statutes and
decisions on the subject. No objection was made to that part of the
charge, nor was any exception taken to it, so we assume that it
conformed to the local law and was applicable to the evidence. The
court then proceeded to explain how that part of the charge should
be applied, and, in that connection, said to the jury that, if they
believed from the evidence that the plaintiff retook possession
under its vendor's lien,
Page 267 U. S. 247
they should next consider whether the resale was made within a
reasonable time, and in doing so should take as the starting point
November 30, when the plaintiff gave notice of its purpose to
retake and resell, and should consider only the period between that
date and December 20, when the resale was concluded. The
defendant's counsel excepted to this, the terms of the exception
being:
"We except to the court fixing November 30 as the time from
which a reasonable time should be figured. I construe the plaintiff
as being always in possession."
The defendant now insists the exception was well grounded. But
we are of a different opinion. As the jury's verdict was for the
plaintiff on the first count, they must have found that the
plaintiff retook possession and made the resale under a vendor's
lien. If it had such a lien under the law of Georgia, as we must
assume in view of the unchallenged charge on that subject, the
court plainly was right in saying the date when possession was
taken under the lien was the starting point from which to reckon a
reasonable time, and was also right in designating November 30 as
that date. The suggestion in the exception that the plaintiff was
"always in possession" had no support in the evidence set forth in
the record, for it shows that the plaintiff surrendered possession
to the carrier at New Orleans, and was not again in possession
until after the notice of November 30 was given declaring the
plaintiff's purpose to take possession and sell. According to the
Georgia statute, which the district court applied, the plaintiff
was entitled to take possession under its lien at any time before
"actual receipt" of the sugar by the defendant. Parks' Ann.Code, §
4132;
Branan v. Atlanta & West Point R. Co., 108 Ga.
70, 73. A duty to sell under the lien could not arise until
possession was taken under it and the reasonable time permitted for
making a sale by way of realizing on the lien hardly would begin to
run before.
Page 267 U. S. 248
What we have just said explains why the testimony offered
respecting the state of the market at Macon in October and
November, before the plaintiff took possession under the lien,
became immaterial.
Judgment affirmed.
[
Footnote 1]
Food Administration Special License Regulations, No. XI,
A-5.
[
Footnote 2]
U.S. Food Administration Special License Regulations, No. VI,
B-2 and C-2.
[
Footnote 3]
U.S. Food Administration Special License Regulations, No. VI,
A-2.