JOHNSTON v. FAIRMONT MILLS et al., 129 F. 74

WADDILL, District Judge (after stating the facts as above).

There are a number of assignments of error in this case, but they all relate, in one form or another, to three questions involved: First, whether or not valid contracts were ever entered into between the parties, as set up in the pleadings; second, whether or not, under the circumstances of this case, the defendant the Fairmont Mills was justified in imposing upon the plaintiff the requirement of a guaranty of his ability to carry out the alleged contracts, his insolvency being admitted; and, third, what was the effect of this requirement, as bearing upon the question of the existence of the prior contracts ?

This case turns upon the question of fact as to whether the alleged contracts were in fact entered into between the plaintiff and the defendant the Fairmont Mills. Upon tliat point the learned judge of the lower court decided that they had not, and, after a most careful review of the entire evidence, with the light of the arguments of able counsel thereon, we have reached the same conclusion. That the minds of parties must meet, and give mutual assent to all of the essential and material features of a contract, is elementary. It cannot be said that such was the case here.

The transaction was conducted between the parties through C. P. Mathews, a broker, and he clearly did not have the right, under the facts of this case, to bind either party without their assent; and certainly he had no such authority to speak for the defendant the Fairmont Mills. The evidence conclusively shows that the custom in the trade was for both buyer and seller to each confirm to the other the broker’s action in writing. This is testified to by the broker himself, who says: “When Mr. Harris submitted the offer, I submitted the offer to Mr. Johnston. I had no authority until I got authority from Mr.

Johnston to confirm the contract. * * * It was always customary for the mill to confirm to the buyer, and the buyer to the mill. I was acting only as intermediary, and each side wanted the contracts confirmed. * * * There was probably something in the offer that Mr. Johnston would confirm the sale by letter. It was understood that Mr. Harris was to receive written confirmation from Mr.

Johnston.” While sundry letters and telegrams passed between Mathews and Johnston, and some between Mathews and Harris, the president of the mill, still it is entirely clear from the whole correspondence that Harris was to receive written confirmation of the sale from Johnston. Mathews’ reply to the telegram from Johnston to him confirming the sales of February, March, and April, concludes, “Please confirm contract to W. I.

Harris, president, Spartanburg, South Carolina;” and Harris’ letter of the nth of October acknowledging the receipt of the letter from Mathews, relative' to confirming the sale concludes, “Weights guaranteed within three pounds, and hereby accept offer of same subject to A. S. Johnston’s confirmation.” The subsequent letters written by Johnston direct to Harris, president, but received after the cancellation of the contract by Harris, likewise show that Johnston was to have given a written confirmation.

In addition to this, the correspondence between Mathews and Johnston also shows that this confirmation was to have been given, and on the day before the cancellation of the contract, October 26, 1900, Mathews wrote: “If you had only confirmed these sales promptly, there would have been no trouble. A lawyer told one of the mills that the only ground he had for getting out, would be that you had failed to confirm the sale. Even now I have never been able to get the sales properly confirmed by you.

I returned the confirmations to you on the 17th for correction; since then I have not had a line from you.” And o>n the 27th of October, the day on which the notice was given that the contracts would be canceled if no guaranty was given, Mathews wrote Johnston: “I will say, however, that all the sales have been confirmed to me regularly, and only awaited your confirmation to the mills for them to confirm. I do not consider you have treated me fairly in the matter.” Johnston thus clearly failed to confirm, in writing, the contracts to Harris.

But this is not the only particular wherein the transaction was not consummated. Their minds never met upon other material and essential portions of the undertaking. They agree as to the quantity of the cotton and the price, but in other essentials entirely differ. Harris understood that the cotton was to be delivered at Moore’s, S. C. Johnston’s confirmation, in so far as it designates a place at all, is at Spartanburg; and it is not entirely clear that he obligated himself to do more than ship the cotton from the place of sale, Meridian, Miss., within the time named.

Harris prescribed that the cotton was to be half each strict and good middling, and emphasized in his second letter by stipulating for strict to good middling cotton, one-half each grade. Johnston agreed only that the cotton should be strict good middling, and not one-half each grade. Harris required the delivery of 100 bales each for the months of February, March, April, May, and June; weights to be guarantied within three pounds. Johnston gave no undertaking as to weight, and, as above stated, had in view manifestly shipments, rather than deliveries — at least, his telegrams and letters are liable to this

interpretation — which might have resulted disastrously to Harris, but showed clearly that in this, as in other particulars, there was an utter failure of the minds of the parties to meet on these essential features of the undertaking. To bind Harris on his offers, it was necessary that the same should be accepted in the identical terms in which they were made; otherwise his offers imposed no obligation upon him; and a proposal to accept, or an acceptance on terms varying from those offered, is a rejection of the offer. In Minneapolis Ry. Co. v. Columbus Rolling Mills, 119 U. S. 149, 7 Sup. Ct. 168, 30 L.

Ed. 376, it is said: “As no contract is complete without the mutual assent of the parties, an offer to sell imposes no obligation until it is accepted according to its terms. So long as the offer has been neither accepted nor rejected, the negotiation remains open, and imposes no obligation upon either party. The one may decline to accept, or the other may withdraw his offer, and either rejection or withdrawal leaves the matter as if no offer had ever been made.

A proposal to accept, or an acceptance upon terms varying from those offered, is a rejection of the offer, and puts an end to the negotiation, unless the party who made the original offer renews it or assents to the modification suggested. The other party, having once rejected the offer, cannot afterwards revive it by tendering an acceptance of it” In 1 Chitty on Contracts (11 Am.

Ed.) it is said at page 15: “Where an agreement is sought to be established by means of letters, such letters will not constitute an agreement, unless the answer be a sin'ole acceptance of the proposal, without the introduction of any new term. ’ And again: “If the original offer leave anything to be settled by future arrangement, it is merely a proposal to enter into an agreement. * * * The agreement is not complete until there is upon the face of the correspondence a clear accession on both sides to one and the same set of terms.” In 1 Parson on Contracts (6th Ed.) p. 476, it is said: “The assent must comprehend the whole of the proposition, it must be exactly equal to its extent and provisions, and it must not qualify them by any new matter.” Applying these principles to the facts in this case, it is manifest that no valid contracts were entered into between the parties, unless it be that Harris’ requirement of a guaranty on or before the 27th of October should be treated as a confirmation of the incomplete contracts theretofore existing.

This action of Harris clearly should have no such effect, since it is apparent from” the entire evidence that he was acting in good faith in what he did.

He made the offers as early as the 10th and 15th of October, which were never accepted, and pending this condition of affairs it developed that Johnston had failed in business — his insolvency being admitted, as of the 20th day of October, 1900; and he had the right to withdraw the offer, or otherwise terminate the transaction, which he did not do in undue haste, but insisted that a proper guarantee of the ability of Johnston to perform the contracts on his part should be given him, designating a day beyond which he would not wait.

Johnston promised to give this guaranty, and endeavored to do so; but, as is apparent from the correspondence between'himself and Mathews, he was unable to furnish the guaranty, and Harris, on the day indicated, declared the transaction at an end. Several days after this date, Johnston was enabled to furnish the guaranty; but Harris then declined to reopen the negotiations, and the transaction thus ended.

Harris was under no obligation to conclude his offers, the same never having been accepted; and hence, when there was a failure to comply with the condition that he generously made, he was legally and morally relieved from any liability to Johnston by reason of the transactions in question. From what has been said, it follows that the action of the lower court should be affirmed.