Frigaliment Importing Co. v. B.N.S. International Sales Corp. (1960)

Frigaliment Importing Co. v. B.N.S. International Sales Corp.
190 F.Supp. 116 (S.D.N.Y. 1960)

Facts: Plaintiff, Frigaliment Importing Co., sued defendant, B.N.S. International Sales Corp., over two contracts. The first involved defendant agreeing to sell to plaintiff 75,000 lbs. of two and a half to three pound chickens, and 25,000 lbs. of one and a half to 2 pound chickens. This contract was signed on May 2, 1957. The second contract, also dated may 2, was identical to the first excepting only that it was for 50,000 lbs. of the heavier chicken, was for a slightly higher price for the smaller chickens, and was to ship on a later date, May 30th. The initial shipment under the first contract was short but the balance was shipped May 17th. When the initial shipment arrived in Switzerland plaintiff found, on May 28, that the two and a half to three pound birds were not young chickens suitable for broiling and frying but were stewing chickens or “fowl”. The plaintiff immediately protested, however shipment uneder the second contract was made on May 29, the two and a half to three pound birds again being stewing chicken. The defendant stopped the transportation of these birds at Rotterdam. The plaintiff claimed that, per the contract, all of the chickens were to be young. The defendant claimed that the definition of “chicken” includes all types, not just young birds.

Issue: Does the plaintiff have the burden to show that ambiguous contractual terms are used in a narrower rather than a broader sense?

Holding: Yes.

Decision/Rationale: (Friendly, J.) The court held that the word “chicken” standing alone was ambiguous. First, the contract itself must be examined to determine if it offers any aid to its interpretation. The plaintiff claimed that the size of the birds alone should indicate that they were to be young. The court found this argument to be unpersuasive. The defendant noted that the contract called not just for chicken but for “US Fresh Frozen Chicken, Grade A, Government Inspected.” Therefore, the Department of Agriculture’s regulations would be incorporated by reference (which favors the defendant’s interpretation). The court carefully examined the negations between the two parties, and although the negations were primarily conducted in German, they used the English word chicken. During the course of negations, the defendant specifically asked the plaintiff’s negotiator if the term chicken was to include the German word “Huhn” – which encompasses both broilers and stewing hens – and was answered in the affirmative. Next, the plaintiff contended that there was a definite trade usage of the word “chicken” which meant “young chicken.” In order to establish trade usage, the law of New York required a showing that “the usage is of so long continuance, so well established, so notorious, so universal and reasonable in itself, as that the presumption is violent that the parties contracted with reference to it, and made it part of their agreement.” The plaintiff provided several expert witnesses in order to establish the trade usage of the word “chicken.” However, the defendant countered with industry experts as well that countered the plaintiff’s views of the usage. The defendant further showed regulations that supported his definition of the word chicken. Also, the defendant was able to show that if the birds shipped were in fact young, due to prevailing market prices at the time, he would have been unable to deliver them properly. In effect, this would show that the plaintiff should have realized that he was paying too low a price to receive the birds he claimed he anticipated. Lastly, the defendant points to the plaintiff authorizing the final shipment of birds as proof that the plaintiffs knew what they were receiving. The plaintiff countered that they had insisted on young birds in the second delivery. When all the evidence was reviewed, it was clear that the defendant believed that it could comply by delivering some stewing chickens instead of only young birds. The defendant’s definition of “chicken” fit the evidence more closely than did the plaintiff’s. When attempting to establish a narrower definition of “chicken” rather than the broader usage, the burden is on the plaintiff. The plaintiff did not meet that burden in this case. Judgment was entered dismissing the complaint with costs.

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