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American Almond Products Co. v. Consolidated Pecan Sales Co.

July 21, 1944

AMERICAN ALMOND PRODUCTS CO.
v.
CONSOLIDATED PECAN SALES CO., INC.



On appeal from the District Court of the United States for the Southern District of New York.

Author: Hand

Before L. HAND, SWAN, and CLARK, Circuit Judges.

L. HAND, Circuit Judge.

The defendant, Consolidated Pecan Sales Co., Inc., appeals from a judgment for damages upon a breach of contract, entered upon an award of arbitrators under ยง 9 of Title 9, U.S.C.A. The result depends upon the answer to two questions: (1) Whether the arbitrators exceeded their powers as defined by the submission; and(2) whether they should have awarded damages, although no evidence on that issue was presented to them. The controversy arose over a contract for the sale of 30,000 pounds of pecan nuts by the defendant to the plaintiff, executed on August 28, 1942, which provided for shipment "in partial lots at Seller's option starting latter part of November/early December, and running through to June." Printed terms were attached, of which those relevant to this controversy are as follows. Article 9: "The Seller shall have the right to deliver the entire order at one time or in portions from time to time within the time of delivery herein provided." Article 10: "Seller * * * reserves the right to make pro-rata delivery in case of short crops or for any cause or condition beyond the Seller's control." Article 11: "neither the Seller nor his Agents shall be liable for any damages or loss to the Buyer from short, delayed or non-shipment or non-delivery caused by * * * partial failure of crops * * * or other causes, unavoidable or beyond the control of the Seller or his Agents. The Seller or his Agent reserves the right to cancel any such sales for any of said causes." The contract concluded with an arbitration clause.

The defendant delivered 990 pounds of nuts; and on the 16th of January, 1943, advised the buyer that there was a short crop, and that it would be able to make only a pro rata delivery. It offered delivery of twenty per cent of the stipulated amount which it later raised to twenty-five per cent, and which the plaintiff refused, insisting upon full delivery, or at least that the proper pro rata amount was greater. Negotiations proving futile, on March 1, 1943, the defendant demanded "arbitration of the following controversy." It recited Article 11 of the contract, and then proceeded, "Cancellation of the unshipped part of a contract dated August 28, 1942, covering 30,000 Stuarts and/or Schley Pecan Pieces, at a price of 40? per pound delivered New York, based on conditions in above clause, which is paragraph 11 of the signed contract." On March 23rd, the defendant filed what it described as an amendment to "amplify and clarify" the issues submitted. "We wish a construction of paragraphs 11 and 10 of the conditions on the reverse side of the contract:

"1 - Does paragraph 11 give the seller, for causes enumerated therein, a right to cancel the contract in its entirety?

"2 - If seller had a right to cancel the contract and exercised this right, does it not relieve the seller of any further obligation or liability under said contract?

"3 - Does paragraph 10 give to the seller a right to make prorata deliveries for causes stated in said paragraph?

"4 - If seller had a right to prorate deliveries and exercised its right, and buyer declined to accept, does that not relieve the seller of any obligation or liability under said contract."

On April 21st, the parties stipulated to waive an oral hearing, and that the arbitration should be conducted in accordance with the rules of the American Arbitration Association. That association appointed there arbitrators, who took the oath on May 14, 1943, and on June 29th of that year, rendered the following award:

"1. That the seller did not have the right to cancel the contract in its entirety pursuant to paragraph 11 thereof.

"2. The seller was not relieved from its obligation and liability under said contract, dated August 28, 1942.

"3. The seller had the right to make prorata deliveries pursuant to paragraph 10, for causes stated therein.

"4. The seller neither tendered nor made a proper or adequate delivery to the buyer pursuant to said ...


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