MIDWEST COLOR OFFSET CO. v. ELEC. CORP., 116 Ohio St. 482 (1927)

158 N.E. 595

THE MIDWEST COLOR OFFSET CO. v. THE THERMAL ELECTRIC CORP.

No. 20049Supreme Court of Ohio.
Decided May 11, 1927.

Sales — Deliveries in stated installments to be separately paid for — Time of essence — Contract construed in light of surrounding circumstances, when — Section 8425, General Code.

In determining whether time is of the essence of a contract to sell goods to be delivered by stated installments, which are to be separately paid for, such contract, by reason of the provisions of paragraph 2 of Section 8425, General Code, will be construed in the light of the surrounding circumstances of the whole transaction, unless, by the expressed terms of the contract, time is made the essence thereof, or, by expressed terms, consideration of the surrounding circumstances is precluded.

ERROR to the Court of Appeals of Hamilton county.

This action was instituted by the plaintiff in error against defendant in error in the municipal court of Cincinnati, to recover on the following account:

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“Invoice No. 321. Our Order No. 2159.

“Sold to Thermal Electric Corporation, Dec. 12, 1924.

“The MidWest Color Offset Company — Dr.

“Terms: 2% ten days — 30 days net.

20,000 folders, as per estimate __________ $779.00 Allowance ________________________________ 29.00 ——- $750.00

“To be paid in three equal payments, thirty, sixty, and ninety days from date.”

The defendant in error, for answer, averred that “on or about September 30, 1924, it entered into a contract in writing with this plaintiff, by the terms of which contract the plaintiff agreed to print and deliver to the defendant 20,000 advertising folders within three weeks of the execution of the said contract,” which the plaintiff failed to deliver within the time stipulated; that on or about December 7, 1924, it did deliver 1,800 of the said folders, which were defective and off color, and the same were refused and returned to plaintiff; and denied that it owed any sum to the plaintiff.

A reply was filed, controverting the averments of the answer as to time of delivery and defective folders.

The evidence disclosed that a contract was entered into on the 4th day of November, 1924, of which the following is a copy:

“MidWest Color Offset Co., 24 N. Jefferson St., Dayton, Ohio.

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“The Thermal Electric Corp., Keith Bldg., Cincinnati, Ohio:
“This is our proposal to furnish you the following, according to the specifications herein given:

“Quantity and description: 20,000 broadsides.

“Trimming size: 17 x 21.

“Stock: Special offset, as used on our regular combination runs.

“Composition: Furnished by us.

“Art work: Furnished by us.

“Presswork — Body: Three colors, both sides.

“Binding: Folded as per dummy approved — four folds.

“Delivery: Starts ten days after O. K’ing proofs; in three equal shipments thirty (30) days apart.

“Price and terms: $779 net. f. o. b. Dayton, Ohio. To be paid in three equal payments. Thirty, sixty, and ninety days.

“Author’s changes (in copy or style) will be charged for extra according to the time consumed by the compositor in making such changes. (Any deviation from the original copy as set up, typographical errors excepted, will be construed as author’s changes.) Overruns and under of 10 per cent. or less will be charged for pro rata, but this does not permit a change in the quantities as stated in this proposal without a revision of prices.

“Accepted November 4, 1924, by Thermal Electric Corp., F.E. Davis, Pres. The MidWest Color Offset Co., by A.R. Richards.

“This proposal is for immediate acceptance and the execution is contingent upon fires, strikes, accidents, or other causes beyond our control.”

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The evidence further disclosed that the proofs were O. K.’d on the 8th or 9th day of November, and that the first shipment of 1,600 folders was made on the 29th day of November; that on the 24th day of November the plaintiff in error wrote a letter to the defendant in error, of which the following is a copy:

“November 24, 1924.

“Thermal Electric Corp., Cincinnati, Ohio.

Att.: Mr. Davis. — Dear Sir: We believe we owe you an apology for the manner in which we have been compelled to delay delivery on your order for 20,000 broadsides. Due to complication of matters beyond our control, we have not been able to give you our usual prompt service and as it sometimes happens, we also had the toughest kind of luck in working through these plates.

“However, I want to advise you that the same are now on the press and that we will send you anywhere from two to five thousand folders, which will go forward to you no later than Saturday of this week. Balance a few days later.

“However, we are quite certain that once you see the kind of job that we are developing, that you will be entirely satisfied with quality end of it at least.

“We appreciate that in order to again get any of your business we will have to overcome the adverse opinion that our service in this instance has so justly created. All we can hope is that you will give us the opportunity to prove that we can and as a rule do satisfy our trade on service as well as on quality. And if you do, you can rest assured we will make good our promise. Sincerely yours, “The MidWest Color Offset Co., Pres. JRZ/MO.”

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To which letter the defendant in error made no reply.

The evidence further disclosed that some of the folders contained in the first shipment were defective, and tended to prove that the defect was due to the cutting of the paper before the ink was thoroughly dry and hardened. The evidence further disclosed that the folders were printed in colors and were advertisements of electric cooking stoves, products of the defendant in error company, and consisted of printed matter and illustrations of such products and the things that could be accomplished with such products; that the folders were of no use to any one other than the defendant in error.

The defendant in error did not return the first shipment of 1,600 folders, and did not notify the plaintiff in error that it intended to rescind the contract on account of the delay in the first shipment, or on account of the defective condition of some of the folders in that shipment, until after it had received the second and final shipment of the balance of the 20,000 folders, which were received on or about December 7, 1924.

The municipal court made a deduction of 10 per cent. from the amount claimed, and rendered judgment against the defendant in error for the balance of the claim. The court of common pleas affirmed the judgment of the municipal court. The Court of Appeals reversed.

Messrs. Mattern, Brumbaugh Mattern, for plaintiff in error.

Mr. Burton E. Robinson, for defendant in error.

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ROBINSON, J.

The question here presented is whether in a contract such as the one here involved, where the goods are fabricated for the peculiar use of the buyer and have no value to any one else, and the contract provides for shipments at stated intervals, a slight deviation from the time specified in the contract in the shipment of the first installment entitles the buyer to treat the contract as breached, and to repudiate the contract.

On the trial of this case, the defendant in error attempted to show that it expected to use the folders at an electrical exhibition in the city of New York, which exhibition began on the 15th day of November. But since the contract did not require any shipment to be made prior to the 19th day of November, and did not require shipment to any place other than Dayton, Ohio, and no request was shown for shipment to New York, the record in that respect would not justify a conclusion that the folders were intended for any such special purpose.

There was no showing made by the defendant in error that the difference of 10 days between the time the contract called for the first shipment and the time when the first shipment was made was of any significance to it or caused it any damage. Unless, therefore, we adopt the rule declared by the Supreme Court of the United States, in Norrington v. Wright, 115 U.S. 188, 6 S.Ct., 12, 29 L.Ed., 366, “In a mercantile contract a statement descriptive of the subject-matter, or of some material incident, such as the time or place of shipment, is ordinarily to be regarded as a warranty or condition precedent, upon the failure or

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nonperformance of which, the party aggrieved may repudiate the whole contract,” we must, upon the question of time of delivery, conclude that the municipal court and the court of common pleas reached a correct conclusion and that the Court of Appeals was in error.

In 1908 an act known as the Uniform Sales Act was adopted by the Legislature, 99 Ohio Laws, 425. Paragraph 2 of Section 45 of that act, being paragraph 2 of Section 8425, General Code, reads:

“When there is a contract to sell goods to be delivered by stated installments, which are to be separately paid for, and the seller makes defective deliveries in respect to one or more installments, or the buyer neglects or refuses to take delivery of or pay for one or more installments, it depends in each case on the terms of the contract and the circumstances of the case, whether the breach of contract is so material as to justify the injured party in refusing to proceed further and suing for damages for breach of the entire contract, or whether the breach is severable, giving rise to a claim for compensation, but not to a right to treat the whole contract as broken.”

It would seem, therefore, whatever may have been the rule in Ohio prior to the enactment of the Uniform Sales Act, or whatever may be the rule in jurisdictions where the Uniform Sales Act has not been adopted, that now, in this state and in jurisdictions having a similar act, the question whether the date of delivery or the date of payment is of the essence of the contract, a condition precedent, is, in the absence of an expressed agreement upon that subject, a question to be determined

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in each case by a consideration not only of the terms of the contract, but also of the circumstances of the case. To illustrate: Had the defendant in error established that its purpose in the execution of this contract was to have these folders for use at the electrical show in New York City, and that plaintiff in error had knowledge of such purpose, and the terms of the contract had required the delivery of the goods at a time which would have enabled it to use them for that purpose, then time would have been of the essence of the contract and the delivery at a time which would have permitted such use would have been a condition precedent to a right to recovery by the plaintiff in error. But since this folder was a general advertisement of the defendant in error’s products, which could be used, and would be useful, at any time, and since the defendant in error wholly failed to show that it desired the folders for any particular purpose, or that they were not as useful at the date of the delivery as they would have been 10 days earlier, there was not only no circumstance tending to require a construction of the contract that the time of delivery was the essence thereof, but, on the contrary, the circumstances warranted the construction that it was not.

The rights of the defendant in error were not to rescind, but to counterclaim for such damages, if any, as it may have sustained. Helgar’s Corporation v. Warner’s Features, Inc., 222 N.Y., 449, 119 N.E. 113.

The question of defective workmanship or defective stock was one of fact, and the trial court found that there was no defect in workmanship or stock except in the first shipment of 1,600 folders,

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and made a deduction of 10 per cent. from the contract price. The plaintiff in error in its bill of particulars had already made a deduction of $29. The deduction therefore made by the plaintiff in error plus the deduction made by the trial court substantially exceeded the contract price for that number of folders. The plaintiff in error is not complaining of the judgment in that respect, and the defendant in error cannot.

Judgment of the Court of Appeals reversed and that of the common pleas affirmed.

MARSHALL, C.J., DAY, ALLEN, KINKADE, JONES and MATTHIAS, JJ., concur.