FEUCHTWANGER et al. v. MANITOWOC MALTING CO., 187 F. 713

BAKER, Circuit Judge (after stating the facts as above). A contention is presented that the contract is unilateral, unenforceable for want of mutuality, in this: That, while defendant in error covenanted to malt grain for plaintiffs in error, the latter did not agree to deliver grain to be malted.

True, they did not so bind themselves in express words; but, taking their express promise to pay monthly for the service and the impossibility of defendant in error’s making the agreed monthly deliveries of malt unless the grain was first supplied, undoubtedly the necessary implication respecting the parties’ intention is that plaintiffs in error undertook to furnish during the season a minimum of 400,000 bushels of barley to be malted by defendant in error. Compare Hudson Canal Co. v. Penn. Coal Co., 8 Wall. 276, 19 L. Ed. 349; Manistee I. W. Co. v. Lumber Co., 92 Wis. 21, 65 N. W. 863; Excelsior W. Co. v.

Messinger, 116 Wis. 549, 93 N. W. 459; W. G. Taylor Co. v. Bannerman, 120 Wis. 189, 97 N. W. 918. Complaint is made of the rejection of certain evidence which plaintiffs in error claim showed a waiver of their obligation to furnish a minimum of 400,000 bushels and a substitution therefor of whatever quantity they might actually need during the season. But there was no plea of waiver or modification, and so the evidence was properly rejected. Motion for leave to make such a defense was not presented until after judgment. This was too late.

At the close of the evidence, plaintiffs in error moved for a directed verdict in their favor. The evidence relating to the first breach and-the alleged rescission was not without conflict,' and the questions of fact on these adverse claims were therefore properly submissible to the jury. The assignment on the refusal to direct a verdict presents only the sufficiency of the evidence as to the amount of damages, concerning which objections for incompetenqy had been interposed.

The expert’s tabulation and explanatory testimony, without which there would have been nothing on which a verdict could rest, were based on things done at defendant in error’s plant, without the expert’s knowledge, during the year ending September 30, 1908.-Two-thinls of the foundation matter was brought into being by defendant in error ex parte and post litem motam. Assuming that the books used in making the tabulation were properly proven and introduced as containing original entries, was evidence of the transact tions inadmissible as being self-serving declarations in aid of a pending suit?

We have not found a specific answer in any adjudicated case or in any supposititious one propounded by a text-writer. On the analogy of ex parte experiments and tests, however, we, deem the matter competent. Here plaintiffs in error engaged to supply barley throughout the year. Their breach deprived defendant in error of part of the gain it would have made during that year.

The price being fixed, what better showing of the deprivation of gain could there be than proof of the actual cost per bushel during the year, together with an estimate (based on proven facts) of how much the actual cost would have been reduced if plaintiffs in error had performed their contract? But this matter of cost was not proven by direct evidence. Regular entries in due course of business are admitted as exceptions to the hearsay rule. Wigmore on Ev. c. 51.

To bring entries within the exception, there must appear, according to the general law of evidence, a practical necessity for their introduction and a circumstantial guarantee that the transactions actually took place as recorded. The practical necessity is apparent in large mercantile and manufactoring businesses where a transaction that has been participated in by numerous employes in the course of their employment is duly recorded as an original entry in permanent form by one who is charged with that duty in pursuance of an established system. Wigmore, § 1730.

But, under the test of trustworthiness, it might be doubted whether the circumstances of this case gave a sufficient warrant of the fairness of defendant in error’s manufacturing cost. The parties had had the same relations for six seasons prior to the season in question. Defendant in error presumably knew its showing of cost and profit during those seasons. It sued for $10,000, thereby in effect alleging that it was being deprived of an opportunity to gain about 3 cents a bushel.

If the case had been tried when the complaint was filed, defendant in error would have had to rely on its doings while the parties were in amicable relationship. When the case was reached, defendant in error relied entirely upon a calculation which was controlled by transactions with strangers after the parties had liad a violent quarrel and were in litigation. This calculation showed more than double the amount demanded, a profit of 100 per cent, on an 8 to 12 days process after deducting every possible expense, including a 5 per cent, return on the investment.

The nature of the showing and the circumstances under which it was created might possibly lead to a conclusion that the appearance of a motive to magnify the damages should have been offset by proving a fair correspondence between costs and profits in normal, peaceful seasons and in the season of dispute and warfare, and that, inasmuch as this evidence was in the possession and peculiarly within the knowledge of defendant in error, the showing in question should not have been admitted except in connection with antecedent showings.

But under the Wisconsin statutes we find that there is no ground for holding the evidence inadmissible on this account, and that (the statutory conditions being fulfilled, as they fairly were in this case) the question of untrustworthiness would have to be advanced affirmatively by. plaintiffs in error. • One of the books introduced was the “Steep and Kiln Record.” The elevator foreman weighed in and out the barley and malt. Each day he would give or send to the bookkeeper in the office slips of paper purporting to show the weights. From these slips the bookkeeper made the first permanent record.

The elevator foreman was present ás a witness on another question, but he was not called upon to testify that he had weighed the barley and malt correctly, that he had correctly transcribed the weights upon the slips, and that he had given or sent all the slips to the office. The bookkeeper’s testimony that he had accurately entered all the slips he received, and that, so far as he knew they were correct, may be taken as true, and yet the unverified report of the foreman may have been false. Under the test of necessity (Mississippi River Logging Co. v. Robson, 69 Fed. 773, 16 C. C. A. 400, and Gardner v.

Wilber, 75 Wis. 601, 44 N. W. 628, decided before

section 4189 was adopted), the Kiln Record might not be admissible apart from the testimony of the elevator foreman. But

section 4189 does not make the hearsay entry inadmissible even if better evidence, direct evidence, is available and practicable. From the general books the expert accountant figured in his tabulation, and testified, that the amount expended for coál during the year was $16,336.94. But the question for the jury was how much coal had been consumed in malting the barley, not how much coal had been paid for during the year. There was no record of coal consumed as there was of barley malted.

The expert testified, in substance, that he knew that the item “coal paid for” was in fact “coal consumed” because on direction .of the company’s officers he had consulted with the man in charge of coal and was informed that the amount on hand at the beginning of the year was practically the same as at the end, and that he had satisfied himself that the information was true because he: had examined the payments for coal for a period before and after the year in question, and had found nothing that caused him to doubt the coalman’s truthfulness.

The books and tabulation therefrom being at most only evidence of “coal paid for,” the expert’s, conclusion as to the amount of “coal consumed” rested, not on' contemporaneous original entries, but on the unsworn oral statements of others. Further error appears in the coal item. The expert, assuming that “coal paid for” equaled “coal consumed,” deducted certain car loads from the amount shown on the books because he said they were used-in drying wheat, not in malting barley.

He knew they were so used because the company’s men had told him, and because he had examined the invoices of the cars in question, and had found thereon a memorandum “Coal used in drying wheat.” When, where, by whom, by what authority the memorandum was written was not shown. But it is urged the error was waived by the cross-examination.

Counsel asked, “Where are those invoices?” Witness answered: “I do not know.” Counsel: “We ask that they be produced.” Counsel for defendant in error: “If they are not here we can get them; not today.” We do not find in the record that they ever were produced; and, if they had been, it would have taken some definite action on the part of counsel for plaintiffs in error to have waived the incompetency. Books containing accounts of money paid to third parties as “general expenses” and otherwise were admitted and made the basis of certain of the expert’s calculations.

These accounts were admissible, if at all, not under

section 4189, but under sections 4186 and 4187. Dohmen v. Blum’s Estate, 137 Wis. 560, 119 N. W. 349. Such hook accounts are inadmissible to prove “any item of money delivered at one time exceeding five dollars” or “money paid to third persons.” As most of the items exceeded $5 and all of them were payments to third persons, these accounts were inadmissible. The error was waived, it is claimed, because receipts or vouchers were in the courtroom and couns'4 for plaintiffs in error referred to some of them in cross-examining the expert.

We do not find in the record any warrant for a claim that receipts for all the inadmissible hook items were in court. And counsel referred only to a few of those that were present. But we do not countenance the contention that an exception to the admission of incompetent evidence is waived because the wronged party endeavors to break its force by cross-examination. So the party would be doubly wronged. We are not required on this record to determine whether or not unsupported receipts or vouchers are of themselves admissible and sufficient proof of payments to third persons.

Among the elements of the calculation was the value of real estate used in defendant in error’s malting business. The accountant on hearsay accepted some and rejected other items as they appeared in the “real estate account.” A basis for this separation, as to identity of parcels, was afterwards afforded by the testimony of the company's vice president.

But he testified that the entries of values were made by the president in January, 1907, and “were comparative valuations with what real estate opposite this plant was being held for.” These were therefore not entries of real estate purchases, even if such transactions could be deemed a part of the due course of business in malting barley. They were not contemporaneous records of any act. At most, they were only a record of the opinion of value held by the president in January, 1907.

Without going further, it is evident that the accountant’s tabulation and explanatory testimony were so largely based on the incompetent declarations of others that they were inadmissible. Questions relating to the charge and to the court’s action in allowing the amendment of the complaint are not likely to arise on a new trial. The judgment is reversed, with the direction to grant a new trial, and to permit plaintiffs in error to amend their answer. For.other oases see same topic & § number in Deo. & Am. Digs. 1907 to date, & Rep’r Indexes