Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379 (1888)

U.S. Supreme Court

Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379 (1888) Arkansas Valley Smelting Company v. Belden Mining Company

No. 197

Submitted April 2, 1888

Decided May 14, 1888

127 U.S. 379

ERROR TO THE CIRCUIT COURT OF THE UNITED

STATES FOR THE DISTRICT OF COLORADO

Syllabus

A contract in writing, by which a mining company agrees to sell and deliver lead ore from time to time at the smelting works of a partnership, to become its property upon delivery and to be paid for after a subsequent assay of the ore and ascertainment of the price, cannot be assigned by the partnership without the assent of the mining company so far as regards future deliveries of ore. Nor is the mining company, by continuing to deliver ore to one of the partners after the partnership has been dissolved and has sold and assigned to him the contract, with its business and smelting works, estopped to deny the validity of a subsequent assignment by him to a stranger.

This was an action brought by a smelting company, incorporated by the laws of Missouri, against a mining company, incorporated by the laws of Maine, and both doing business in Colorado by virtue of a compliance with its laws, to recover damages for the breach of a contract to deliver ore made by the defendant with Billing and Eilers and assigned to the plaintiff. The material allegations of the complaint were as follows:

On July 12, 1881, a contract in writing was made between the defendant of the first part and Billing and Eilers of the second part by which it was agreed that the defendant should sell and deliver to Billing and Eilers at their smelting works in Leadville ten thousand tons of carbonate lead ore from its mines at Red Cliff at the rate of at least fifty tons a day, beginning upon the completion of a railroad from Leadville to Red Cliff, and continuing until the whole should have been delivered, and that "all ore so delivered shall at once upon the delivery thereof become the property of the second party," and it was further agreed as follows:

"The value of said ore and the price to be paid therefor

Page 127 U. S. 380

shall be fixed in lots of about one hundred tons each -- that is to say, as soon as such a lot of ore shall have been delivered to said second party, it shall be sampled at the works of said second party and the sample assayed by either or both of the parties hereto, and the value of such lots of ore shall be fixed by such assay; in case the parties hereto cannot agree as to such assay, they shall agree upon some third disinterested and competent party, whose assay shall be final. The price to be paid by said second party for such lot of ore shall be fixed on the basis hereinafter agreed upon by the closing New York quotations for silver and common lead, on the day of the delivery of sample bottle, and so on until all of said ore shall have been delivered."

"Said second party shall pay said first party at said Leadville for each such lot of ore at once, upon the determination of its assay value at the following prices,"

specifying, by reference to the New York quotations, the price to be paid per pound for the lead contained in the ore, and the price to be paid for the silver contained in each ton of ore, varying according to the proportions of silica and of iron in the ore.

The complaint further alleged that the railroad was completed on November 30, 1881, and thereupon the defendant, under and in compliance with the contract, began to deliver ore to Billing and Eilers at their smelting works, and delivered 167 tons between that date and January 1, 1882, when

"the said firm of Billing and Eilers was dissolved, and the said contract and the business of said firm, and the smelting works at which said ores were to be delivered, were sold, assigned, and transferred to G. Billing, whereof the defendant had due notice;"

that after such transfer and assignment, the defendant continued to deliver ore under the contract, and between January 1 and April 21, 1882, delivered to Billing at said smelting works 894 tons; that on May 1, 1882, the contract, together with the smelting works, was sold and conveyed by Billing to the plaintiff, whereof the defendant had due notice; that the defendant then ceased to deliver ore under the contract, and afterwards refused to perform the contract, and gave notice to the plaintiff that it considered the contract

Page 127 U. S. 381

cancelled and annulled; that all the ore so delivered under the contract was paid for according to its terms; that

"the plaintiff and its said assignors were at all times during their respective ownerships ready, able, and willing to pay on the like terms for each lot as delivered, when and as the defendant should deliver the same, according to the terms of said contract, and the time of payment was fixed on the day of delivery of the 'sample bottle,' by which expression was, by the custom of the trade, intended the completion of the assay or test by which the value of the ore was definitely fixed,"

and that

"the said Billing and Eilers, and the said G. Billing, their successor and assignee at all times since the delivery of said contract, and during the respective periods when it was held by them respectively, were able, ready and willing to and did comply with and perform all the terms of the same so far as they were by said contract required, and the said plaintiff has been at all times able, ready, and willing to perform and comply with the terms thereof, and has from time to time since the said contract was assigned to it so notified the defendant."

The defendant demurred to the complaint for various reasons, one of which was that the contract therein set forth could not be assigned, but was personal in its nature, and could not, by the pretended assignment thereof to the plaintiff, vest the plaintiff with any power to sue the defendant for the alleged breach of contract.

The Circuit Court sustained the demurrer and gave judgment for the defendant, and the plaintiff sued out this writ of error.

Page 127 U. S. 387

MR. JUSTICE GRAY, after stating the facts as above, delivered the opinion of the Court.

If the assignment to the plaintiff of the contract sued on was valid, the plaintiff is the real party in interest, and as such entitled, under the practice in Colorado, to maintain this action in its own name. Rev.Stat. § 914; Colorado Code of Civil Procedure § 3; Albany & Rensselaer Co. v. Lundberg, 121 U. S. 451. The vital question in the case therefore is whether the contract between the defendant and Billing and Eilers was assignable by the latter, under the circumstances stated in the complaint.

At the present day, no doubt, an agreement to pay money or to deliver goods may be assigned by the person to whom the money is to be paid or the goods are to be delivered if there is nothing in the terms of the contract, whether by requiring something to be afterwards done by him or by some others stipulation, which manifests the intention of the parties that it shall not be assignable. But everyone has a right to select and determine with whom he will contract, and cannot have another person thrust upon him without his consent. In the familiar phrase of Lord Denman, "You have the right to the benefit you anticipate from the character, credit, and substance of the party with whom you contract." Humble v. Hunter, 12 Q.B. 310, 317; Winchester v. Howard, 97 Mass. 303, 305; Ice Co. v. Potter, 123 Mass. 28; King v. Batterson, 13 R.I. 117, 120;

Page 127 U. S. 388

Lansden v. McCarthy, 45 Mo. 106. The rule upon this subject, as applicable to the case at bar, is well expressed in a recent English treatise:

"Rights arising out of contract cannot be transferred if they are coupled with liabilities, or if they involve a relation of personal confidence such that the party whose agreement conferred those rights must have intended them to be exercised only by him in whom he actually confided."

Pollock on Contracts (4th ed.) 425.

The contract here sued on was one by which the defendant agreed to deliver 10,000 tons of lead ore from its mines to Billing and Eilers at their smelting works. The ore was to be delivered at the rate of fifty tons a day, and it was expressly agreed that it should become the property of Billing and Eilers as soon as delivered. The price was not fixed by the contract or payable upon the delivery of the ore. But, as often as a hundred tons of ore had been delivered, the ore was to be assayed by the parties or one of them, and if they could not agree, by an umpire, and it was only after all this had been done, and according to the result of the assay, and the proportions of lead, silver, silica, and iron thereby proved to be in the ore, that the price was to be ascertained and paid. During the time that must elapse between the delivery of the ore and the ascertainment and payment of the price, the defendant had no security for its payment except in the character and solvency of Billing and Eilers. The defendant therefore could not be compelled to accept the liability of any other person or corporation as a substitute for the liability of those with whom it had contracted. The fact that upon the dissolution of the firm of Billing and Eilers and the transfer by Eilers to Billing of this contract, together with the smelting works and business of the partnership, the defendant continued to deliver ore to Billing according to the contract did not oblige the defendant to deliver ore to a stranger to whom Billing had undertaken, without the defendant's consent, to assign the contract. The change in a partnership by the coming in or the withdrawal of a partner might perhaps be held to be within the contemplation of the parties originally contracting, but however that may be,

Page 127 U. S. 389

an assent to such a change in the one party cannot estop the other to deny the validity of a subsequent assignment of the whole contract to a stranger. The technical rule of law, recognized in Murray v. Harway, 56 N.Y. 337, cited for the plaintiff, by which a lessee's express covenant not to assign has been held to be wholly determined by one assignment with the lessor's consent, has no application to this case.

The cause of action set forth in the complaint is not for any failure to deliver ore to Billing before his assignment to the plaintiff (which might perhaps be an assignable chose in action), but it is for a refusal to deliver ore to the plaintiff since this assignment. Performance and readiness to perform by the plaintiff and its assignors, during the periods for which they respectively held the contract, is all that is alleged; there is no allegation that Billing is ready to pay for any ore delivered to the plaintiff. In short, the plaintiff undertakes to step into the shoes of Billing and to substitute its liability for his. The defendant had a perfect right to decline to assent to this and to refuse to recognize a party with whom it had never contracted as entitled to demand further deliveries of ore. The cases cited in the careful brief of the plaintiff's counsel as tending to support this action are distinguishable from the case at bar, and the principal ones may be classified as follows:

First. Cases of agreements to sell and deliver goods for a fixed price, payable in cash on delivery, in which the owner would receive the price at the time of parting with his property, nothing further would remain to be done by the purchaser, and the rights of the seller could not be affected by the question whether the price was paid by the person with whom he originally contracted or by an assignee. Sears v. Conover, 3 Keyes 113, 4 Abb. (N.Y.App.) 179; Tyler v. Barrows, 6 Robertson (N.Y.) 104.

Second. Cases upon the question how far executors succeed to rights and liabilities under a contract of their testator. Hambly v. Trott, Cowper 371, 375; Wentworth v. Cock, 10 Ad. & El. 42, 2 Per. & Dav. 251; Williams on Executors (7th ed.) 1723-1725. Assignment by operation of law, as in the

Page 127 U. S. 390

case of an executor, is quite different from assignment by act of the party, and the one might be held to have been in the contemplation of the parties to this contract although the other was not. A lease, for instance, even if containing an express covenant against assignment by the lessee, passes to his executor. And it is by no means clear that an executor would be bound to perform, or would be entitled to the benefit of, such a contract as that now in question. Dickinson v. Calahan, 19 Penn.St. 227.

Third. Cases of assignments by contractors for public works, in which the contracts, and the statutes under which they were made, were held to permit all persons to bid for the contracts, and to execute them through third persons. Taylor v. Palmer, 31 Cal. 240, 247; St. Louis v. Clemens, 42 Mo. 69; Philadelphia v. Lockhardt, 73 Penn.St. 211; Devlin v. New York, 63 N.Y. 8.

Fourth. Other cases of contracts assigned by the party who was to do certain work, not by the party who was to pay for it, and in which the question was whether the work was of such a nature that it was intended to be performed by the original contractor only. Robson v. Drummond, 2 B. & Ad. 303; Waggon Co. v. Lea, 5 Q.B.D. 149; Parsons v. Woodward, 22 N.J.Law 196.

Without considering whether all the cases cited were well decided, it is sufficient to say that none of them can control the decision of the present case.

Judgment affirmed.