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COHEN v. JOHNSON

June 22, 1950

COHEN et al.
v.
JOHNSON et al.



The opinion of the court was delivered by: MURPHY

In this diversity action, plaintiffs, of Rochester, New York, *fn1" t/a Rochester Fuel and Feed Company, engaged in the purchase and sale of anthracite coal, seek damages for breach of an alleged contract from defendants, of Shamokin, Pennsylvania, located in this district, co-partners t/a Bellaire Coal Sales, engaged in the purchase and sale of anthracite coal. The case was tried to the court without a jury. The operative facts occurred in Pennsylvania; we look to Pennsylvania law to determine the substantive rights of the parties. Newspaper Readers Service Inc. v. Canonsburg Pottery Co., 3 Cir., 146 F.2d 963.

Plaintiffs assert a valid, definitive, binding contract of purchase and sale, which this court should enforce, was created when Morris Cohen and defendants executed a certain paper on July 1, 1947; failing therein, that such a contract may be implied in fact from plaintiffs' letter to defendants July 3, 1947, and defendants' conduct subsequent thereto. *fn2"

 As to the paper executed July 1, 1947:

 Defendants' source of supply and quality of coal varied. Having no mines of their own they purchased from truckers and independent miners. Defendants' plant and cleaning equipment was inferior to those of the larger coal companies. Defendants' coal was sub-standard as to size and impurities.

 Plaintiffs and defendants first met when in June, 1947, one of defendants' customers at Rochester refused to accept delivery of a car of defendants' coal 'because of quality and size'. Plaintiffs purchased the coal at $ 5.00 per ton although the price at that time in the open market was.$ 9.00 per ton.

 Morris Cohen, after inspecting defendants' plant and product on July 1, 1947, advised them he desired to purchase some of their coal during the 1947-48 burning season. After discussing the amount of coal defendants would likely have available defendants quoted plaintiff a price per ton of $ 8.75 for stove and chestnut,.$ 7.00 for pea. Plaintiff wrote some notes on the top sheet of defendants' desk memorandum pad, signed his name thereto, removed the sheet and asked defendants to sign their names thereto, stating he wanted something to show to his brothers. Defendants refused to sign, advising him they did not make a practice of doing so, that they were only quoting prices, and suggested that the word 'quotations' be written across the top of the page. After plaintiff complied with this suggestion defendants affixed their signatures under that of the plaintiff and plaintiff took the paper. *fn3"

 On the second sheet of defendants' pad plaintiff wrote a memorandum which he signed and gave to defendants. *fn4"

 For some time prior and subsequent to July 1, 1947, the anthracite operators and miners were negotiating a new wage contract. It was generally known in the industry that the adjustment would be upward and that the wage increase would be immediately absorbed and reflected in the price per ton of anthracite coal. Plaintiff and defendants knew about this conference and the probable outcome. Defendants intended, and in our judgment Morris Cohen knew, that this increase would result in defendants issuing new quotations and that the increase would be reflected in the prices at which coal would be sold in the future by defendants to plaintiff and defendants' other customers.

 From the testimony of plaintiff and other witnesses, we find that the general custom in the anthracite industry was not to enter into contracts for the sale of coal, wholesale, over any long period of time.

 From time to time in the coal industry the seller changes price quotations according to the rise and fall of the market; the price at which coal is bought and sold is determined by the prevailing market price at the time of the particular order which the seller is free to fill at that price or to bargain as to the price.

 When price quotations are made it is not considered in the industry as an offer of sale but as an invitation to the trade to submit orders- offers to buy- which may or may not be accepted.

 Acceptance is indicated by shipping the coal. If shipment is not made within fifteen days the order is considered cancelled.

 It was defendants' intention to give plaintiffs quotations; an invitation to submit orders; not to enter into a firm contract for any specific amount of coal.

 In its complaint and at the trial plaintiffs produced a paper purporting to be that executed July 1, 1947. We find however that the ...


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