Opinion
Argued March 19, 1903
Decided April 7, 1903
Adelbert Moot and William L. Marcy for appellant.
Charles A. Hawley for respondent.
This action was to recover damages for the breach of a written executory contract between the parties for the sale and delivery of goods. The contract was an open one as to the quantity of goods which the defendant was to deliver. The defendant became bound to furnish the plaintiff "with their entire radiator needs for the year 1899" on the terms and at the prices specified, as to which there is no dispute. The defense is that the defendant filled all orders from the plaintiff until forty-eight thousand feet of radiation had been delivered, which was as much as the plaintiff had ever required before, but that the plaintiff continued to send in orders that would bring the aggregate for the year up to one hundred thousand feet, and these orders in excess of the amount delivered the defendant refused to fill. The defendant construed the contract as calling for only the usual amount of goods and not materially exceeding the quantity delivered in any one year before under a similar contract. The defendant claimed in its answer that there was a mutual mistake in framing the contract, since the intention was to limit the quantity of goods to be delivered to an amount such as had been called for in previous years of similar dealing between the parties, and asked that the contract be reformed in this respect.
The proof given at the trial was directed to that issue, but the facts were found against the defendant and the defense failed. The contention of the learned counsel for the defendant now is that such a limitation was necessarily imported into the contract and it should be construed as containing it. We think that the contention cannot be sustained. The defendant bound the plaintiff to deal exclusively in goods to be ordered from it under the contract and to enlarge and develop the market for the defendant's wares so far as possible. Hence, the parties left the contract open and indefinite as to the quantity of goods that the plaintiff might order from time to time. It is quite probable that this controversy originated in a circumstance which the defendant, at least, had not anticipated or provided for. After the execution of the contract there was a large advance in the market price of iron and the manufactured products of iron, and, consequently, the value and selling price of the goods covered by this contract advanced in the same or possibly in a greater proportion. The needs of the plaintiff could be indefinitely enlarged when the market was in such a condition as to enable it to undersell its competitors in the same business in consequence of a favorable contract with the manufacturer of the goods. If a party contracts for goods upon a rising market he is ordinarily entitled to such profits as may accrue to him by reason of a prudent or favorable contract. We cannot perceive that there is any error of law in this judgment, although the plaintiff has recovered a considerable sum in damages for the breach. The case in its general features is the same as another case which was recently before this court, where there was a similar recovery that was sustained. ( Fuller Co. v. Schrenk, 58 App. Div. 222; affd., 171 N.Y. 671.)
There is but one exception in the record that requires any notice. The plaintiff called its manager and treasurer as a witness, and proved by him that he was familiar with the business and the orders sent by the plaintiff to the defendant. He was then asked whether "those orders were for goods which were required for the needs of the plaintiff's business." The question was objected to by the defendant's counsel on the ground, among others, that it called for the opinion of the witness. The objection was overruled and the defendant's counsel excepted. There are two answers to this exception: (1) It is by no means clear that any defense was interposed which required the plaintiff to give such proof. The only defenses were a mutual mistake upon which a demand for the reformation of the contract was based, and the claim that the contract upon its face, when properly construed, was limited to orders that in amount and aggregate did not exceed the orders of the previous year. There was no such defense as that the goods ordered were not required for the needs of the plaintiff's business. (2) The question did not call for an opinion but a fact. If the plaintiff could sell the goods ordered at a profit then it needed them, and there was no doubt about the plaintiff's ability to sell the goods at a larger profit. What a merchant may need in his business is generally a matter of fact, and if he should testify that he needed fifty barrels of sugar or flour, or so many chests of tea, it would not, I think, violate the rule of evidence which requires a witness to testify to facts and not opinions. The damages and all the other questions in the case called for an inquiry as to facts. This court is concluded on all such questions by the unanimous decision below.
But we do not mean to assert that the plaintiff had the right under the contract to order goods to any amount. Both parties in such a contract are bound to carry it out in a reasonable way. The obligation of good faith and fair dealing towards each other is implied in every contract of this character. The plaintiff could not use the contract for the purpose of speculation in a rising market since that would be a plain abuse of the rights conferred and something like a fraud upon the seller. The plaintiff's claim for damages in this case might have been affected by the condition and customs of the trade, and any breach of good faith on its part could be taken into account. In such a case it would be competent for the defendant to plead and prove facts to show that the orders were in excess of the plaintiff's reasonable needs and were not justified by the conditions of the business or the customs of the trade. In other words, that the plaintiff was not acting reasonably or in good faith, but using the contract for a purpose not within the contemplation of the parties; that is to say, for speculative as distinguished from regular and ordinary business purposes. But no defense of this kind was either pleaded or proved in this case, and so the judgment must be affirmed, with costs.
PARKER, Ch. J., BARTLETT, HAIGHT, VANN, CULLEN and WERNER, JJ., concur.
Judgment affirmed.