Western Lithograph Co. v. Vanomar Producers
Western Lithograph Co. v. Vanomar Producers
Opinion of the Court
This is an appeal by the defendant, a corporation, from a judgment for the plaintiff in an action to recover the price of certain labels sold and delivered by the plaintiff to the defendant. It appears that the defendant is a fruit canning concern requiring labels for its goods, and the plaintiff is a maker of labels. In February, 1916, they entered into a formal contract in writing whereby the defendant agreed to buy of the plaintiff and the plaintiff agreed to furnish the defendant all the labels the latter should need during the next ensuing five years at certain specified prices dependent upon the character of the labels ordered. The contract was performed for the year 1916 at the prices specified. By June of the next year, however, the cost of materials and labor had increased greatly, with a consequent increase to the plaintiff of the cost of making labels. This was represented to the president and general manager of the defendant, and he was requested to agree to a flat increase of thirty-five cents per thousand on the contract prices. This he did by letter dated June 15, 1917, addressed to the plaintiff, and reading:
“Gentlemen:
“Referring to the conversation held between your Mr. Courtlander and the writer, we wish to say that we shall be very glad to pay you a sum equal to 35c per M., beyond our contract price, for all labels which we may receive from you this season’s pack.
“We appreciate the efforts you have made in the past to meet our wishes and requirements and thoroughly under *368 stand some of the obstacles which confront you in the endeavor to take care of your large business this season.”
The labels for 1917 were delivered and paid for at the increased rates. Those for 1918 were likewise delivered and payments on account made. There was, however, an unpaid balance of some six thousand seven hundred dollars at the original contract prices, and of some nine thousand four hundred dollars at the increased prices, and for the latter sum the present action was brought. The defendant’s answer admits liability for the six thousand seven hundred dollars, but denies it for anything over that amount. The plaintiff recovered judgment for the nine thousand four hundred dollars, and the defendant appeals.
It is evident that the defendant’s liability for the difference between the two sums mentioned, which is all that is in controversy, turns on the validity of the defendant’s promise to pay the extra thirty-five cents per thousand evidenced by the letter quoted. The defendant advances two grounds why the promise is not valid—first, that the defendant’s president had no authority to give it, and, second, that it is not supported by a consideration.
*369 “ ‘Where one has the actual charge and management of the general business of a corporation, with the knowledge of the members, or the directors, this is sufficient evidence of authority, and the company will be bound by his contracts, made on their behalf, within the apparent scope of the business intrusted to him. ... A corporation which suffers appearances to exist, and its officers and agents to so act, as to give one employed by such officers and agents reason to believe that he is employed by the company, becomes liable to such person as his [its] employee to pay for the services rendered. ’ ”
Now, the letter of June 15, 1917, was merely an agreement to pay an increase over the prices at which the plaintiff was already lawfully bound to the defendant to deliver labels. It is evident that because of the promise the defendant received no benefit, nor was it agreed that it should receive any, to which it was not already lawfully entitled. It is likewise evident that the plaintiff did nothing and agreed to do nothing which it was not already obligated to do. A plainer case of a mere naked promise it would be difficult to imagine. The courts in some instances have held that where one party to a contract refuses to go on with it, and the other party to induce him to go on promises to pay him additional compensation, such promise is supported by a consideration. The theories upon which this conclusion is reached are various and it is exceedingly doubtful if any of *370 them are sound. (Alaska Packers Assn. v. Domenico, 117 Fed. 99, [54 C. C. A. 485].) The authorities are collated and their different rules well stated in 13 Corpus Juris, 351-355. But so far as we are aware, the authorities are in practical agreement that where, as here, all that appears is that one party found himself with a losing contract and, without abandoning it, requested the other party to pay him more, which the other party promised to do, the promise is without consideration.
It is stated in Corpus Juris (volume 13, page 355) that “In Minnesota the court, while adopting the view that the obligation imposed by a contract is to perform the contract and not to pay damages, and that there is ordinarily no consideration for a promise of additional pay to induce performance, introduces the anomalous exception that, where the party refusing to complete his contract does so by reason of some unforeseen and substantial difficulty in the performance of the contract, which was not known or anticipated by the parties when the contract was entered into, and which cast on him an additional burden not contemplated, and the opposite party promises him extra pay or benefits if he will complete his contract, and he so promises, the promise to pay is supported by a valid consideration; ...”
The plaintiff seeks to bring the present case within this supposed rule of the Minnesota cases because of the unexpected increases in the cost of manufacture which confronted it. But surely unexpected increases in manufacturing costs are just the risk which every manufacturer assumes and contemplates when he enters into a contract to make goods for future delivery. Furthermore, an examination -of the Minnesota cases will show that the unforeseen difficulties to which they refer are difficulties existing by reason of facts unknown to the parties when they enter into the contract, so that it was entered into under a mistake. (Michaud v. MacGregor, 61 Minn. 198, [63 N. W. 479]; King v. Duluth etc. Co., 61 Minn. 482, [63 N. W. 1105].) In the latter case it is said: “Inadequacy of the contract price which- is the result of error of judgment, and not of some excusable mistake of fact, is not sufficient.” Whether the rule of these cases be correct or not, it has no application to a case where the increased costs of the contractor are due *371 merely to fluctuations in the market price of labor and materials. The risk of such fluctuations is a burden which he necessarily contemplates and assumes when he makes the contract. Such, and such only, is the present case.
Judgment reversed.
Shaw, J., and Lawlor, J., concurred.
Hearing in Bank denied.
Shaw, J., Lawlor, J., Wilbur, J., Olney, J., and Sloane, J., concurred.
Reference
- Full Case Name
- WESTERN LITHOGRAPH COMPANY (A Corporation), Respondent, v. VANOMAR PRODUCERS (A Corporation), Appellant
- Cited By
- 12 cases
- Status
- Published