Citations
- 130 F.2d 471
Full opinion text
GOODRICH, Circuit Judge.
This appeal is from a judgment of the District Court for the Western District of Pennsylvania in an action brought for an alleged breach of contract. Plaintiff is a manufacturer of corrugated paper boxes. It is the seller in the transaction out of which this law suit arises. Its dealings were had with a corporation known as Capstan Glass Company, the buyer. The inter-corporate relationships between Capstan, Anchor Hocking Glass Corporation and others are irrelevant to the discussion of this point since it is settled by stipulation that whatever liability may rest upon Capstan was assumed by Anchor Hocking Glass Corporation.
Capstan in 1921 was engaged, at Connellsville, Pennsylvania, in the manufacture of glass containers for food and beverage companies. It shipped these containers to its customers in paper cartons. In that year Capstan, as buyer, entered into a written contract with Fort Wayne, as seller, in which it was agreed that the buyer would buy not less than 90% of its entire needs of corrugated paper and solid fiber products from Fort Wayne as seller. The buyer’s needs were estimated not to exceed 500 carloads per year. The seller agreed to reserve production space for the manufacture of the buyer’s requirements and not to make contracts for more than 50% of its production capacity. The contract was to continue for five years and thereafter until written notice of annulment was given by either party. There was a provision for termination a year after the notice of annulment was received during which period the seller could supply during the last three quarters of that year three-quarters, one-half and one-quarter what had been purchased during the ninety days prior to the notice of annulment.
During the years following the making of this contract the amount of purchases by the buyer increased from year to year. In 1930 the contract was amended, the amendments also incorporating supplementary agreements which had been made during the years since 1921. Under the new contract, the proportion of its requirements which Capstan agreed to buy from Fort Wayne was to be not less than 75% of its needs and these needs were estimated not to exceed 800 carloads a year. The provision for quantities to be bought and sold following notice of annulment was made automatic, and not optional, for either of the parties.
In 1930 also the parties entered into an agreement whereby Capstan agreed to erect a building on its land to be leased to Fort Wayne which would install the necessary machinery and equipment for making the paper containers. The building was erected by Capstan and leased to Fort Wayne. In 1937 the' demand for paper boxes having increased it was agreed that Capstan should enlarge the building. Fort Wayne advanced the money for this purpose and the terms were agreed upon for the amortization of the advance. The judgment of the court below gave recovery to Fort Wayne for the unamortized portion of this advance and no question of recovery of this amount is before us on appeal.
The parties did business under this arrangement satisfactorily up to the latter part of 1937. During the last few months of that year there was a sudden recession of business so that the demand for glass containers fell off sharply and from the combination of this and labor trouble at the Capstan plant there was a marked reduction in the business done there at the close of that year. In October of this year Anchor Cap Corporation, which owned all of th& Capstan stock, purchased the assets of the: Hocking Glass Company and the consolidated business became the Anchor Hocking Glass Corporation. During the close of 1937 and the opening months of 1938 production of glassware at the Capstan plant remained at a low level. It is found as a fact that the president and general manager concluded that Capstan could not hope for any substantial increase of business within a. reasonably brief period of time. In May, 1938, it was directed by resolution that operations at the plant should be suspended