which they intended to use during the year 1900, that, in order to sustain that defense, it must appear not only that the plaintiffs wrote to their various agents, "telling them to order all the goods in the fall they could for the next year's business," but that it must be further made to appear that such orders were made, and that the defendant rescinded the contract, or refused to execute other orders for plaintiffs by reason thereof." That part of the instruction which we have placed in italics, and to which the exception appears to have been addressed, is indefensible, in that it clearly implies that acts amounting to a breach of contract by one party do not constitute a breach until they become known to the opposite party. This proposition is untenable. Acts which in law amount to a violation of an express agreement, and are of such a nature as will operate to discharge the opposite party from his liability to further perform, will have that effect, even before they become known to him who has the right to complain; and he may avail himself thereof as a defense whenever he ascertains that such acts have been committed. The legal effect of an act amounting to a breach of contract must be the same whether it is known or unknown to the opposite contracting party. Indeed, when it becomes known to the opposite party, he may in turn do some act that will operate as a waiver of the breach, which he cannot well do until he is aware of the breach. Therefore, if the plaintiffs gave their agents. directions to send in orders for more barrels than were needed for use in their business during the year 1899, with a view of stocking up for the succeeding year, and such orders were given, this action on the plaintiffs' part was none the less a defense to their action for a breach of the contract, although the defendant company was not aware that such orders had been given when it declined to furnish further barrels, and although its refusal to furnish barrels was not based on that ground. Even if it be true that the defendant company refused to make and ship any more barrels which were ordered by the plaintiffs because the price of barrels had advanced, yet if, after it was sued, it discovered that the plaintiffs had given orders which amounted to a violation of the contract, and that they had been given before there was any rupture of the agreement on its part, it was entitled to avail itself of that defense. There was some evidence in the case, we think, which tended to show, and from which a jury would be warranted in inferring, that some orders had been given by the plaintiffs ostensibly to meet the requirements of their business for the year 1899, but in reality to obtain a stock of barrels for the succeeding year, owing to an expected further advance in the price of barrels; and, such being the fact, the error in the charge must be regarded as material. The third and last exception quoted above is based, as we think, upon a misconception of the charge. The trial court did not instruct the jury, unqualifiedly, that the sale of the car load of barrels to the Paragon Refining Company was not such a breach of the contract as justified the defendant company in discontinuing shipments. What it did say on that subject was substantially as follows: That if the plaintiffs "bought some considerable quantity of barrels for the purpose of speculating in them, and that they actually sold them for that purpose," it would be a valid defense to the action. In * * * the same connection (and it is to this clause that the exception evidently relates) the court did instruct the jury, in effect, that if it appeared that the plaintiffs' agent at Des Moines sold a lot of barrels that had been ordered from the defendant to the Paragon Refining Company, not for the purpose of speculation, but to accommodate a business competitor, and merely as an act of courtesy, such a sale would not operate to discharge the contract, so far as the defendant was concerned. There was some evidence in the case tending to show that the sale complained of had been made under the circumstances supposed by the trial court, and the instruction was evidently intended to enlighten the jury on that phase of the case. We are not prepared to hold that this instruction was materially erroneous. If the plaintiffs gave the defendant company an order for a car load of barrels, doing so in good faith, for the purpose of meeting the supposed requirements of their business at Des Moines during the year 1899, and after the arrival of the barrels sold them to the Paragon Refining Company merely to accommodate that company temporarily, and as an act of courtesy, we do not think that a single sale made under such circumstances would be such a breach of the contract as would absolve the defendant from further obligation to perform. Whether the sale of these barrels was such a breach as operated to discharge the contract depends, in our judgment, upon whether they were originally ordered in good faith by the plaintiffs for their own use, and to meet the supposed requirements of their business during the year 1899, or for such ulterior purpose as was alleged in the defendants' answer. It cannot be, we think, in a case like the one in hand, where by the contract the quantity of goods agreed to be sold and delivered was uncertain, and depended upon the requirements of the plaintiffs' trade, that the plaintiffs could not sell any barrels which they had ordered in good faith for their own use without discharging the opposite party from its agreement. An unexpected decrease in the demand for oil, and other causes, might render it necessary to dispose of a part of a stock of barrels which the plaintiffs had accumulated in good faith with the expectation of using them. It must be presumed that the parties to the contract foresaw that such events might occur, and that it was also understood that the plaintiffs would conduct their business in the usual way, extending such courtesies to rival concerns as were customary in the trade. For these reasons, we think that the court's instruction which is now under consideration embodied the right idea, and was substantially correct, and that the instruction which the defendant requested, which declared, in substance, that this sale of barrels to the Paragon Refining Company in itself operated to discharge the contract, without reference to the motives which inspired it, and without reference to the question whether the barrels so sold were ordered in good faith, was itself erroneous, and was properly refused. In the brief with which we have been favored by counsel for the defendants in error, the position is taken that, even if the defenses pleaded by the defendant in its answer were true (that is to say, if the plaintiffs did give orders for barrels with a view of stocking up for the year 1900, and also with a view of selling them to others at a profit), yet that such acts would not operate to discharge the defendant from its obligation to perform, but would merely entitle it to recoup the damages which it has sustained in consequence of such wrongful acts. The learned trial judge took a contrary view, holding that the covenant of the one party to supply barrels to meet the other's requirements, and the implied covenant of the opposite party to order only such barrels as were necessary for that purpose, were dependent, and not independent, covenants, or, in other words, that a breach of the latter covenant by the plaintiffs would discharge the defendant at least from its obligation to make further deliveries. No exception was taken to this ruling, and we refer to it only because the question may arise in the further progress of the case. Moreover, if the contention on the part of the plaintiffs is sound, it might follow that the error above specified was not prejudicial, and would not warrant a reversal. Without going into this question at length, it is sufficient to say that we are entirely satisfied with the conclusion which was reached by the trial court. If the plaintiffs ordered from the defendants barrels which were not needed for use in their business during the year 1899, with intent to stock up for the year 1900, or to sell the barrels so ordered at a profit, they violated a material obligation which was imposed on them by the contract, and did so deliberately. The implied promise to order only such barrels as they needed for the year 1899 was a substantial part of the consideration for the defendant's promise to furnish barrels during that year at the price specified. If the defendant company had been requested to supply barrels to meet the requirements of the plaintiffs' business during a period of two years, or to enable them to sell barrels to third parties at a profit, it might, and very likely would, have charged a higher price for its barrels than the price specified in the contract. The breach of the contract complained of was not one of those unintentional or enforced violations of the provisions of a contract in some minor particular, which will sometimes be excused to the extent that the opposite party will only be allowed to take advantage of the breach by recouping his damages. Vide Ralston, Disch. Cont. pp. 46–48. On the contrary, it was a breach of one of the material provisions of the agreement, which entitled the defendant to say that it would treat the contract as abrogated, so far as future deliveries thereunder were concerned. The plaintiffs, after being guilty of such acts as those charged in the answer, could not insist upon further performance, and compel the defendant company to resort to an action for damages, and to such remedy only. It had the right to say, "As you have already ordered barrels which you impliedly agreed not to order, we will not take the chances of your continuing to do so, but will treat the contract as at an end." The authorities, in our judgment, amply sustain the conclusion which was reached by the trial court,—that the breach complained of, if proven, was one whch operated to discharge the obligation of the defendant to further perform, if it elected to do Norrington v. Wright, 115 U. S. 188, 6 Sup. Ct. 12, 29 L. Ed. 366; King Philip Mills v. Slater, 12 R. I. 82, 34 Am. Rep. 603; Rugg v. Moore, 110 Pa. 236, 1 Atl. 320; Mining Co. v. Humble, 153 U. S. 540, 551, 552, 14 Sup. Ct. 876, 38 L. Ed. 814; Smith v. Coal Co., 36 Mo. App. 567; Murphy v. City of St. Louis, 8 Mo. App. 483; St. Louis Paper Box Co. v. J. C. Hubinger Bros. Co., 40 C. C. A. 577, 580, 100 Fed. 595. For the error heretofore pointed out, we deem it necessary to reverse the judgment and grant a new trial. It is so ordered. (116 Fed. 248.) ANGLO-AMERICAN PROVISION CO. v. UNITED STATES. (Circuit Court of Appeals, Seventh Circuit. May 8, 1902.) No. 834. 1. CUSTOMS DUTIES-DRAWBACKS - IMPORTED MATERIALS USED IN EXPORTED MANUFACTURES OR PRODUCTS. Section 30 of the tariff act of 1897 provides that "where imported materials on which duties have been paid are used in the manufacture of articles manufactured or produced in the United States, there shall be allowed on the exportation of such articles a drawback equal in amount to the duties paid on the materials used, less one per centum of such duties: Provided that when the articles exported are made in part from domestic materials the imported materials, or the parts of the articles made from such materials, shall so appear in the completed articles that the quantity or measure thereof may be ascertained." Held, that such provision does not entitle an exporter of hams and bacon produced and packed in the United States to a drawback of duties paid on imported borax, which is applied to the cut surfaces of the meat, when it is intended for export only as a preservative during shipment, and which is afterward washed out so far as possible. The borax in such case is no part of the manufacture or product, nor, if conceded to be such, does it "so appear in the completed articles that the quantity or measure thereof may be ascertained." 2. SAME. Nor can the drawback be allowed in such case on the theory that the borax exported is itself a manufacture because it was imported in lumps, and ground or powdered before being applied to the meat; since it is not exported in the form of powdered borax, but is absorbed into the surface of the meat. In Error to the Circuit Court of the United States for the Northern Division of the Northern District of Illinois. James C. McShane, for plaintiff in error. S. H. Bethea, U. S. Atty., Oliver E. Pagin, Ass't U. S. Atty.,. Rudolph Matz and Walter L. Fisher, for the United States. Before JENKINS, GROSSCUP, and BAKER, Circuit Judges. BAKER, Circuit Judge. Plaintiff in error failed in its action to recover from the government a drawback of customs duties paid on imported borax used in packing hog products for export. Under the revenue act of 1897, now in force, a duty of five cents a pound is levied on imported borax. Section 30 of the act provides: "That where imported materials on which duties have been paid are used in the manufacture of articles manufactured or produced in the United States, there shall be allowed on the exportation of such articles a drawback equal in amount to the duties paid on the materials used, less one per centum of such duties: Provided, that when the articles exported are made in part from domestic materials the imported materials, or the parts of the articles made from such materials, shall so appear in the completed articles that the quantity or measure thereof may be ascertained: And provided further, that the drawback on any article allowed under existing law shall be continued at the rate herein provided. That the imported materials used in the manufacture or production of articles entitled to drawback of customs duties when exported shall, in all cases where drawback of duties paid on such materials is claimed, be identified, the quantity of such materials used and the amount of duties paid thereon shall be ascertained, the facts of the manufacture or production of such articles in the United States and their exportation therefrom shall be determined, and the drawback due thereon shall be paid to the manufacturer, producer, or exporter, to the agent of either or to the person to whom such manufacturer, producer, exporter, or agent shall in writing order such drawback paid, under such regulations as the secretary of the treasury shall prescribe." The court made a special finding of facts, which plaintiff in error challenges in some respects, but which is fully sustained by the evidence. The finding is substantially as follows: Plaintiff in error is a corporation engaged at Chicago in the pork-packing industry, employs 1,400 to 1,700 men, has over $3,000,000 invested in the business, slaughters and exports over 700,000 hogs annually, maintains extensive slaughter and packing houses, and in connection therewith operates car shops, cooper shops, etc. In killing, cleaning, dressing, and cutting up the hogs, a considerable part of the work is done by machinery, and the rest is divided among many skilled workmen, each of whom performs a separate part. The cuts are then cured, either in a pickling solution, which consists mainly of salt, or by being sprinkled with dry salt and allowed to remain thus from 10 to 40 days. The meats are fully cured and made ready for consumption without the use of borax. The meats intended for foreign markets are then taken to the packing room and rolled in a trough containing refined crystal borax in powdered form. The borax is brushed from the skin surface, leaving on the cut surfaces only so. much as naturally adheres. The meats are then placed in boxes and pressed down by machinery. The boxes are nailed and strapped and put on railroad cars for shipment. Part of the borax, by capillary attraction, enters mechanically into the outer layer of the meat, except on the skin side. The extent to which it penetrates depends upon the condition of the meat, the amount that sticks to the cut surfaces, the season of the year, temperature and humidity, and the time consumed in shipment. Expert chemists estimated the penetration to be from one-eighth to one-fourth of an inch. When meats thus shipped in borax are received abroad, they are washed in warm water. This is for the purpose of removing all the borax possible, which becomes waste. If the borax has penetrated beyond the usual extent, the meats are said to be borax eaten, and their value is proportionately diminished. If the meats were intended for sale here. no borax would be applied. The sole purpose of using the borax is to preserve the meats while in transit. Refrigeration, if practicable, would serve the same end. The quantity of borax in and upon any piece of meat can be determined by chemical analysis. The |