PHALANX AIR FREIGHT v. NATIONAL SKYWAY FREIGHT CORP

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District Court of Appeal, First District, Division 2, California.

PHALANX AIR FREIGHT, Inc., v. NATIONAL SKYWAY FREIGHT CORP. et al.

Civ. 14447.

Decided: December 29, 1950

Burns & McKeever and James E. Burns, all of San Francisco, for appellant. Dudley Harkleroad, Rudolph J. Scholz, San Francisco, for respondent.

Plaintiff had judgment against defendant for damages for breach of contract. Defendant was operating airplanes as an uncertified carrier, i. e., it was not authorized to hold itself out as a common carrier but was authorized only to operate as a contract carrier. Being thus unable to solicit freight in less than plane-load shipments defendant arranged with plaintiff to engage in the business of freight forwarding, whereby plaintiff would enter into contracts with individual shippers for the shipment by air of less than plane-load lots and after combining such individual shipments into plane-load lots forward them by defendant's planes. Pursuant to this arrangement defendant engaged in the business of freight forwarding in San Francisco using the facilities of defendant for the air-transportation.

On November 15, 1946 the parties reduced their contract to writing and it is for the breach of this written contract that plaintiff recovered, based on the fact that on January 10, 1947 defendant ceased its operations by air to and from San Francisco.

On this appeal defendant argues that the written contract did not bind it to maintain air-operations to and from San Francisco and that the contract was illusory because of lack of mutuality. By the terms of the writing defendant bound itself ‘to transport said shipments for Forwarder (plaintiff), all upon and subject to and in caccordance with provisions set forth in this contract * * * Air Carrier (defendant) shall load said merchandise on the airplanes of Air Carrier at the times and at the originating airports mutually agreed upon by the parties.’ Attached to the agreement as an exhibit was a schedule of rates which included rates ‘San Francisco and New York’ and ‘San Francisco and Chicago’. The evidence further showed that both before and after the execution of this writing plaintiff's business with defendant was in San Francisco. The conduct of the parties fully supports the finding that the San Francisco airport was an ‘airport mutually agreed upon by the parties' within the meaning of that langage as used in the contract. It is hornbook law that a contract is to be construed to give it a reasonable effect, Civ.Code, sec. 1643; 6 Cal.Jur., Contracts, sec. 169, p. 271, and any other construction of the contract here in question would do violence to this salutary rule.

The contract contained a provision making it terminable by plaintiff ‘at an time by giving Air Carrier at least thirty (30) days notice.’ This did not render the contract illusory as contended by defendant. While a provision for termination by one party at will has that effect a provision for termination after notice for a fixed period does not. Brawley v. Crosby Research Foundation, Inc., 73 Cal.App.2d 103, 113 et seq., 166 P.2d 392; 1 Williston on Contracts, Rev. Ed., sec. 105, p. 365; 17 C.J.S., Contracts, § 100(g), p. 453. Plaintiff bound itself to ship by defendant's planes ‘all freight over which it has control’ and it was bound to do this until notice of termination and for thirty days thereafter. It thus agreed to confer a benefit and suffer a prejudice which afforded consideration for defendant's promises to it. Civ.Code, sec. 1605.

By paragraph eleventh of the writing: ‘The rates which are enumerated on Schedule A and the volume guaranteed by Forwarder will be renegotiated monthly; but this renegotiation does not affect any provisions set forth in this contract.’ Defendant argues that ‘it is clear that if no rate or volume guarantees were negotiated for a specific point, as none were negotiated for San Francisco after January, 1947, plaintiff cannot recover for any damages purported (sic) caused by defendant's termination of the instant contract, since, in effect, we have here a contract which was to be renegotiated monthly and no renegotiations having occurred no binding contract existed for subsequent months.’

We can see no escape from the validity of this argument. When an essential term of a contract, as the guaranteed volume and rates to be charged must be held to be in this case, is left to the future agreement of the parties there is no enforceable contract. ‘There is no dispute that neither law nor equity provides a remedy for breach of an agreement in the future.’ Autry v. Republic Productions, Inc., 30 Cal.2d 144, 152, 180 P.2d 888, 893; Warson v. Talpey-Arnold Syndicate, 202 Cal. 656, 262 P. 716; Kerr Glass Mfg. Corp. v. Elizabeth Arden Sales Corp., 61 Cal.App.2d 55, 141 P.2d 938; Los Angeles Soda Works v. Southern California Aquazone Co., 103 Cal.App. 105, 284 P. 253; Dillingham v. Dahlgren, 52 Cal.App. 322, 198 P. 832; Fly v. Cline, 49 Cal.App. 414, 193 P. 615; Jules Levy & Bro. v. A. Mautz & Co., 16 Cal.App. 666, 117 P. 936; 1 Williston on Contracts, Rev. Ed., sec. 45, p. 131. Where the matter left for future agreement is minor or subsidiary to the main contract the contract may be enforced despite the failure to agree on the minor or subsidiary matter, 1 Williston on Contracts, Rev. Ed., sec. 48, pp. 136–138, but the rates to be charged and the volume to be guaranteed are too integral and important to the contract here involved to fall under the latter rule.

Since the proof may show an agreement on rates and volume for the month of January or a waiver by acceptance of freight without such agreement for that month the plaintiff may still be entitled to a recovery for failure to perform to the end of January, but the damages actually allowed covered a longer period of time.

The contention that plaintiff cannot in any event recover because its operations were illegal under the Civil Aeronautics Act of 1938, 49 U.S.C.A. § 401 et seq., was not urged in the trial court and depends on questions of fact which are raised for the first time on appeal. For this reason we will not consider that question. Levitt v. Glenn L. Clark & Co., 91 Cal.App.2d 662, 205 P.2d 747; Svistunoff v. Svistunoff, 94 Cal.App.2d 651, 211 P.2d 352; Gelb v. Benjamin, 78 Cal.App.2d 881, 178 P.2d 476; Grimes v. Nicholson, 71 Cal.App.2d 538, 162 P.2d 934.

Certain elements of damage allowed are obvious duplications. Plaintiff cannot recover both for office expenses and loss of gross profits since the office expenses are an element of cost which would have been incurred in earning the profits; nor can plaintiff recover both the value of stationery rendered useless by the defendant's conduct and the cost of new stationery to replace it.

Judgment reversed.

DOOLING, Justice.

NOURSE, P. J., concurs.