When there is a dealing between merchants for successive cargoes
of merchandise upon time for which notes of hand were to be given,
payable from the date of the ascertainment of the quantity of each
cargo, and an arrangement is afterwards made for the substitution
of an interest account for the notes which were to be given, and in
that arrangement the seller stipulates that the allowance of the
interest account should depend upon the continuance of the original
time of credit, and that the buyer's balance on account should
always be under a certain sum, and the buyer exceeds that amount
and refuses to make a remittance or payment upon the call of the
seller to bring the account within that sum, the seller may arrest
the further delivery of any cargo or cargoes, though the same was
in the course of being delivered to the buyer upon the seller's
endorsement of the invoices and bills of lading of such
cargoes.
In the absence of all understanding between the buyer and seller
that any cargo
Page 59 U. S. 490
which had been delivered and not actually paid for, though notes
of hand had been given for the same, was not to be considered
within the new arrangement, such cargo must be taken into the
computation in ascertaining whether the balance due by the buyer
exceeds the amount of credit allowed to him.
In this case, the true construction of the new arrangement is
that the existing notes of hand are to be counted as making a part
of the limit which the buyer was not to exceed.
The facts of the case are stated in the opinion of the
Court.
Upon the trial in the circuit court, the counsel for the
plaintiffs (the Barredas) and defendants offered several prayers to
the court as instructions to the jury which the court declined to
grant, and instructed the jury as follows:
"1. Under the contract made by the letters of the 9th, 10th, and
11th of March, the amount for the cargo of
The Lucy
Elizabeth, and for which notes had been given, must be taken
into the calculation and charged against the defendants in
determining whether the balance against them amounted to
$40,000."
"2. If, in this mode of computation, the balance against the
defendants for guano previously sold and delivered amounted to
$40,000 at the time when the further delivery of the cargoes of
The Beatrice and
The Ailsa was refused by the
plaintiffs, the refusal was justifiable under the contract. They
were not bound, in such a state of the account, to deliver these
cargoes on credit. And if they offered to deliver them on the
payment of the money or satisfactory security and the defendants
refused to comply with these terms, the plaintiffs had a right to
stop the delivery notwithstanding the previous endorsement and
delivery of the bill of lading to the defendants, and the refusal
as stated in the testimony is no breach of contract on the part of
the plaintiffs and is not a bar to the recovery in this action of
the amount due for the guano actually received by the
defendants."
To which instructions the counsel for the defendants excepted,
and the jury found a verdict for the plaintiffs for $74,636.13,
with interest from 12th of September, 1854, till paid.
MR. JUSTICE WAYNE delivered the opinion of the Court.
This is an action of assumpsit brought in the Circuit Court of
the United States for the Eastern District of Virginia, by the
defendants in error against Masters & Son to recover from them
a balance of $77,966.13, arising from the sales of guano,
Page 59 U. S. 491
as stated in the bill of particulars at pages three and four of
the record.
The transactions out of which this dispute arose commenced on
the 21st of January, 1854.
Barreda & Brother, residing in the City of Baltimore, were
largely engaged in the importation of guano into the United States.
Masters & Son were shipping and commission merchants in
Alexandria, Virginia. Barreda & Brother had found it necessary
in conducting their business to establish a limit of credit, both
as to time and amount for purchases made by those who dealt with
them. For any excess above that credit, purchasers had to pay cash
or give satisfactory paper with their endorsement. The
uncontradicted statement of the Barredas in their letter to Masters
& Son of the 15th May, 1854, corroborated by other
circumstances, shows, that in the year 1852, this limit of credit
was $25,000; and that their dealings with the masters from that
time, up to the sale of two cargoes of guano on the 21st January,
1854, and afterwards, until changed by the letters between them of
the 9th and 10th March, 1854, had been regulated accordingly.
The sale of the two cargoes of guano just mentioned is as
follows:
"We have sold to Messrs. S. S. Masters & Son two cargoes of
Peruvian guano -- from vessels
Lucy Elizabeth three
hundred and thirty-five tons, and
Giaour two hundred and
seventy-one -- both on their way from Peru. The said guano to be
delivered in the port of Alexandria, in Virginia, when the vessels
may arrive. Messrs. Masters & Son will act as our agents to
receive the cargo and attend to the vessels, free of any charge,
and to pay the value of the guano they may receive, at the price of
$47.50 per ton in bulk, in notes payable in Baltimore, four months
after date."
"F. BARREDA & BROTHER."
"Baltimore, 21st January, 1854"
Subsequently to that date, the precise time when does not appear
from the record, Masters & Son purchased from the Barredas
another cargo of the ship
Princess Alice, and on the 18th
February a fourth -- that of the ship
Ailsa.
The Lucy Elizabeth arrived with her cargo at Alexandria on the
1st February. The
Giaour, with hers, about the 10th of the
same month. Masters & Son attended to unlading the cargoes of
both vessels and sent to the Barredas a certificate of the cargo
received from
The Lucy Elizabeth on the 2d March, namely,
485.21.4 tons of No. 1 guano, in bulk at $47.50 per ton, and
25.1.21 tons of No. 2 guano in bulk, for which they were charged
$24,108.64, the quantity of No. 2 being charged
Page 59 U. S. 492
to them at $42.50. They remitted to the Barredas on the 6th
March three notes of hand payable on the 2d and 5th of July; two of
them for $8,000, and a third for $8,108.64, amounting to
$24,108.64. Up to this time, the cargo of
The Giaour and
The Princess Alice had not been ascertained, though both
ships were then being unladed under the agency of Masters & Son
according to the arrangement in the memorandum of sale of the 21st
January. And the correspondence shows that then there had not been
any extension by the Barredas of the amount of credit, which had
hitherto been allowed to Masters & Son upon their previous
purchases. In this state of their dealing, Masters & Son wrote
to the Barredas on the 9th March:
"As our purchases are likely to be pretty large this year, and
we noticed, some time ago that one of our mutual friends H. W. Fry
had arranged with you to keep an interest account with him at six
percent, and we, for the same reason, prefer not to give notes.
Further, as it is at times an advantage to have it in our power to
make payments when the local exchange is most favorable, we will be
obliged if you will allow us also this accommodation, giving us an
average credit of four months on these other cargoes."
To this letter Barreda & Brother reply on the 10th March.
They state, we will
"keep an interest account with you at six percent to facilitate
your payments, provided that you will never exceed an average time
of four months for the payment of each cargo; and that the balance
on account against you will always be under forty thousand dollars,
being the largest credit we use to allow."
The Masters' reply in a letter of the 11th March:
"Your acceptance of our proposition, made with the view of our
not having to pay the whole value of our purchases in notes
&c., is also duly appreciated -- and we note the conditions
regarding the open account."
At the date of this arrangement, there was charged to Masters
& Son on the books of Barreda & Brother $24,108.64, the
value of
The Lucy Elizabeth's cargo, for which the masters
had given three notes, payable on the 2d and 5th July. Eighteen
days after this arrangement, the Masters send to the Barredas a
certificate of
Giaour's cargo, amounting to $17,094.34,
and remit a payment on account of it of $6,000. The next item in
the account is the value of the cargo of
The Princess
Alice, amounting to 38,029.92. But they had written to the
Barredas on the 30th March, saying:
"
The Ailsa cannot now reach this too soon for us, and
we prefer not relinquishing our purchase of the said cargo, and
further we believe we are selling by considerable the bulk of the
guano applied for here, we wish it was at a better profit, and find
the demand good. From present prospects,
Page 59 U. S. 493
we shall want a cargo each ensuing month. With your present
unprecedentedly large importations, we suppose we can make our
calculations to get this supply from you without having to look far
ahead."
The Barredas answer: "For the present, we have no cargo to offer
you in the time you mention." But on the 18th April they write: "We
will send you The Beatrice, reply immediately." Masters & Son
write on the same day: "We will take
The Beatrice," and
the Barredas rejoin: "Ship
Beatrice will be ordered to
you, provided she arrives before the end of May next." She arrived
on the 24th April, and was ordered to Masters & Son. On the
same day, the Barredas ask in another letter: "Will you take
The Ailsa if she arrives here?" The Masters answers: "Send
The Ailsa if she comes as heretofore concluded upon." She
arrived early in May, and was ordered to Alexandria. Thus, in the
whole, five cargoes were bought by the Masters from the Barredas,
each of them upon a credit of four months, notes having been given
for that of
The Lucy Elizabeth with the understanding by
both parties that notes were not to be given for the other
purchases, the quantities of which had not been ascertained when
the arrangement of the 10th March was made, and that they were to
be paid for according to that arrangement. But the value of three
of the cargoes had been ascertained, amounting, according to the
returns of Masters & Son to Barreda & Brother, to
$79,232.90. Payments had been made to the amount of $29,000. On the
12th May the Barredas wrote, calling the attention of Masters &
Son to the state of the account, and requesting them to make a
remittance of $10,232.90, "as our limit in your account is $40,000,
and it being then beyond the limit of the credit in the amount of
the remittance asked for." In a postscript to the letter, they say:
"Of course the value of
The Beatrice and
Ailsa
cargoes must be paid cash. 2 P.C. off." To this letter the Masters
reply without making the remittance, and say:
"On the 9th March last, we had purchased from you four cargoes
of guano, about 2,500 tons, or $120,000 worth, at four months -- no
other terms mentioned, and to this moment we have never heard of
any other, three of the said cargoes were received and being
received, and the fourth was daily expected. On the above-named
date we asked you to allow us to keep an interest or open account
with you, as we did not like to pay the whole value of our
purchases in notes; to this you had no objection to the value of
$40,000; the balance, as we had to infer, we must settle for
agreeably to the original bill of purchase."
To this letter the Barredas reply:
"Yours of the 13th instant has been received. When we first went
into business with you, we mentioned to you that our limit for
credit was
Page 59 U. S. 494
$25,000, we making to you the sales of three, or four, or twenty
cargoes, our impression would have been, as was in that case, that
we were to accept your paper for $25,000, and the balance that you
might owe in satisfactory paper with your endorsement. Certainly
you could never have expected us to accept your notes for such an
amount as our sales, though your responsibility may be superior to
it. Afterwards, when you proposed to open with us an account, with
interest, to facilitate your payments, we agreed to it, provided,
that you would never exceed an average time of four months for the
payment of each cargo, and that the balance on account against you
will always be under $40,000 -- this being the largest credit we
use to allow. You also understood in the same way our conditions,
and took good care to make a remittance of $6,000, together with
the return of
The Giaour's cargo, to keep yourselves
within the limits of your credit with us."
In a few days after writing their letter of the 17th, Barreda
& Brother made an effort through the agency of Mr. Coyle to
have an amicable settlement with Masters & Son, offering to
them either of the following propositions: that they would deliver
to Mr. Coyle all the guano received from
The Beatrice and
Ailsa and such a portion of the cargo of
The Princess
Alice as may be necessary to cover the $10,234.90 of excess of
their account -- or settle their values in cash, less two percent
-- or give satisfactory paper with their endorsement, payable in
New York or Baltimore, at four months from the day when the offer
was made, that being the 22d of May.
Neither of these propositions was accepted, and this suit was
brought to recover the balance on account against Masters &
Son, including the value of all the guano they had received from
The Lucy Elizabeth, The Giaour, Princess Alice, Beatrice,
and
Ailsa after having given to them credit for payments
made. There is no dispute concerning either the debit or credit
side of the account, but the controversy arose from the different
view entertained by the parties as to their respective rights under
the arrangement made for an interest account and the limit of
credit mentioned in it and whether, in the actual state of the
account and under the course pursued by the Barredas, they were
justified in arresting the delivery of the undischarged portions of
the cargoes of
The Beatrice and
Ailsa on account
of the neglect and refusal of Masters & Son to make the
required remittance to reduce the account against them to
$40,000.
Our first objection to the construction of that arrangement as
given by Masters & Son is its variance from the terms used by
them in their letter of the 9th of March asking for the
substitution
Page 59 U. S. 495
of an interest account instead of giving notes for their
purchases and from their language in their letter of the 11th
March, in reply to the letter of the Barredas of the 10th, granting
their request upon the conditions mentioned in it. They preface
their application by saying,
"As our purchases will be very large this year, we prefer not to
give notes, and will be obliged if you will allow us an interest
account, giving us an average credit of four months on these other
cargoes,"
and in their letter of the 11th say
"Your acceptance of our proposition, made with the view of our
not having to pay the whole value of our purchases in notes
&c., is also duly appreciated, and we note the conditions
regarding the open account."
If from the first an application may be made that it was their
intention that the favor asked by them was to be applied to future
purchases, and not to include purchases which they had made and
which had not been paid for, there can be no doubt that their
understanding of the arrangement was that it was to include both,
when in thanking the Barredas for their acceptance of their
proposition they state it was made with the view of their not
having to pay the whole value of their purchases in notes. Besides
having applied the arrangement to their purchases of the cargoes of
The Giaour and
Princess Alice, both of which had
been bought but neither of which had been ascertained when they
asked for an interest account and when it was granted, they could
not afterwards give to the arrangement an exclusive application to
cargoes to be thereafter bought, and when they say their request
for an interest or open account had been made with the view of not
having to pay the whole value of their purchases in notes, and
afterwards say, "we note the conditions regarding the open
account," one of them being that the balance on account against
them shall never be larger than $40,000, it is conclusive that they
then understood that amount to be the extent of their credit for
all of their purchases, according to the account as it then stood
on the books of the Barredas or as it might be enlarged.
But it was urged that the limit of the amount of their credit
was not to exceed at the time when the Barredas wrote their letter
of the 12th May. It was said that the amount then still due for the
cargo of
The Lucy Elizabeth should not have been taken
into the computation in ascertaining whether the balance due by the
Masters amounted to more than $40,000, because that cargo had been
sold under a different contract, in no way connected with the other
purchases. Such, however, was not the fact, for
The
Giaour's cargo was bought under the same memorandum of sale,
and the cargo of
The Princess Alice had been bought before
the cargo of
The Giaour had been ascertained,
Page 59 U. S. 496
and the Masters, after the arrangement had been made for an
interest account, applied it to both, when their cargoes were
ascertained, by not giving notes for either, and transmitting their
certificates of the quantity of each, without any direction that a
new and separate account of their cost should be made of them
distinct from the debit against them in the books of the Barredas
for the cargo of
The Lucy Elizabeth. Had it been intended
otherwise, they should have given such a direction, and not have
said, "we note the conditions regarding the open account," the
limitation of the credit to be allowed being one of them, expressed
in language so plain that it cannot be doubted that the Barredas
never meant to give to Masters & Son a larger credit upon their
purchases than $40,000, and that when their account exceeded it,
they were to have the right to call for payments to reduce it to
that amount. When they called for the remittance of $10,232.90, the
account against Masters & Son exceeded it by that amount. They
failed to make the payment, and continuing to refuse to do so, we
are of the opinion that the Barredas had a right to arrest the
delivery of the cargoes of
The Beatrice and
Ailsa
notwithstanding the endorsement and delivery of the bills of lading
to Masters & Son, and that their refusal to deliver the same,
as stated in the testimony, is no breach of contract, and is not a
bar to the recovery in this action of the amount due for the guano
actually received by Masters & Son. Such was the instruction
given by the court upon the trial of the case in the circuit court,
and, having expressed our concurrence with that view, we will only
add that when there is a dealing between merchants for successive
cargoes of merchandise upon time, for which notes of hand were to
be given payable from the date of the ascertainment of the quantity
of each cargo, and an arrangement is afterwards made for the
substitution of an interest account for the notes which were to be
given, and in that arrangement the seller stipulates that the
allowance of the interest account should depend upon the
continuance of the original time of credit and that the buyer's
balance on account should always be under a certain sum, and the
buyer exceeds that amount and refuses to make a remittance or
payment upon the call of the seller to bring the account within
that sum, the seller may arrest the further delivery of any cargo
or cargoes, though the same was in the course of being delivered to
the buyer upon the seller's endorsement of the invoices and bills
of lading of such cargoes.
In the absence of all understanding between the buyer and seller
that any cargo which had been delivered and not actually paid for,
though notes of hand had been given for the same,
Page 59 U. S. 497
was not to be considered within the new arrangement, such cargo
must be taken into the computation in ascertaining whether the
balance due by the buyer exceeds the amount of credit allowed to
him.
Judgment of the circuit court is affirmed.