Atlantic Fish Co. v. Dollar Steamship Line
269 P. 926, 205 Cal. 65, 1928 Cal. LEXIS 485 (1928)
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Rule of Law:
A party's consent to modify an existing contract is revocable at any time before it has been acted upon by the other party and before the consenting party has received new consideration or the other party has suffered detriment due to reliance on the modification.
Facts:
- In July 1924, plaintiff purchased 300 cases of codfish from Gorton-Pew Fisheries Company, Ltd., with the express understanding that the goods would be shipped under refrigeration from Boston to San Francisco on defendant’s vessel, the “President Hayes.”
- On or about August 12, 1924, defendant received the goods on board the “President Hayes” in Boston, and an initial bill of lading was issued to the shipper, providing for shipment under refrigeration.
- On August 13, 1924, the shipper wired plaintiff that the “President Hayes” refrigerator compartment was disabled and asked if plaintiff authorized shipment under ventilation or preferred to hold the goods in New York.
- On August 14, 1924, Mr. Colety, Jr., acting for plaintiff, wired back authorizing the shipment to come through under ventilation.
- On the morning of August 15, 1924, Mr. H. M. Colety, the senior member of plaintiff's firm, informed defendant’s freight office representative, Mr. Herman, that the goods required refrigeration for preservation, whereupon Mr. Herman assured him the refrigeration plant would be repaired in New York and the goods shipped under refrigeration as originally ordered.
- Subsequent to August 15, 1924, and prior to the shipment's arrival, Mr. Colety was repeatedly assured by Mr. Herman that the goods were en route under refrigeration, despite plaintiff receiving a new bill of lading showing 'ventilation'.
- At the time of the first conversation between Mr. Colety, Sr., and Mr. Herman (August 15), the steamer was either on the high seas or about to land at the port of New York, where it was scheduled to remain for several days.
Procedural Posture:
- Plaintiff filed an action in a trial court to recover damages for detriment to a shipment of dried fish against defendant, alleging breach of contract for failure to carry goods under refrigeration.
- The trial court returned a verdict and judgment for plaintiff in the amount claimed.
- Upon motion by defendant, the trial court granted a new trial, predicated upon alleged insufficiency of the evidence.
- The case is before this court on appeal from the trial court's order granting a new trial.
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Issue:
Is a party's consent to modify an existing contract for carriage, given without new consideration, revocable prior to the other party acting upon the modification to its detriment?
Opinions:
Majority - Preston, J.
No, a party's consent to modify an existing contract for carriage, given without new consideration, is not enforceable if revoked prior to the other party acting upon the modification to its detriment. The court held that when the defendant issued the first bill of lading and accepted the goods, a binding contract to carry the goods under refrigeration was formed. The plaintiff’s subsequent consent to ship under ventilation, secured via wires, was without any new consideration to support it. This consent was revoked by the senior member of the plaintiff’s firm within 24 hours and before the defendant had acted upon the modification to its detriment (i.e., before the vessel departed New York without repairing refrigeration). Because there was no consideration for the modification and no detrimental reliance by the defendant before revocation, the original bill of lading, requiring refrigeration, remained the true contract between the parties. The court cited Civil Code section 1605 (defining good consideration) and `Western Lith. Co. v. Vanomar Producers` for the principle that consideration is required for contract enforceability.
Analysis:
This case emphasizes the critical role of consideration in contract modifications, particularly for pre-existing, valid agreements. It establishes that a mere agreement to alter contract terms, unsupported by new consideration or detrimental reliance from the party seeking to enforce the modification, can be unilaterally withdrawn by the consenting party. This protects parties from being bound by uncompensated changes, reinforces the integrity of original contractual terms, and highlights that promises without reciprocal value or action generally lack contractual force. It provides a safeguard against opportunistic modifications of existing contracts.
