Crane Ice Cream Co. v. Terminal Freezing & Heating Co.
128 A. 280 (1925)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A contract based upon the personal character, credit, and substance of a party is not assignable without the consent of the other party. This is particularly true for requirements contracts where the seller's obligations are measured by the specific and personal needs of the original buyer.
Facts:
- Terminal Freezing and Heating Company ('Terminal'), an ice manufacturer, entered into a contract with William O. Frederick, an ice cream manufacturer.
- The contract obligated Terminal to supply Frederick with all the ice he required for his business, up to a maximum of 250 tons per week, at a fixed price.
- The agreement required Frederick to purchase ice exclusively from Terminal (up to the weekly limit) and allowed him to pay for each week's deliveries on the following Tuesday, meaning Terminal extended him credit.
- The contract was renewed and in effect when Frederick sold his entire ice cream business—including its plant, goodwill, and contracts—to Crane Ice Cream Co. ('Crane').
- As part of the sale, Frederick assigned his ice supply contract with Terminal to Crane without Terminal's knowledge or consent.
- Crane was a significantly larger corporation than Frederick's business, with operations in multiple cities and substantially different business requirements.
Procedural Posture:
- After Frederick assigned the contract, Terminal refused to deliver ice to Crane and declared the contract terminated.
- Crane Ice Cream Co. sued Terminal Freezing and Heating Co. in a Maryland trial court for breach of contract.
- Terminal filed a demurrer to Crane's complaint, arguing that the contract was not assignable as a matter of law.
- The trial court sustained Terminal's demurrer and entered a final judgment against Crane.
- Crane, as the appellant, appealed the trial court's judgment to the Court of Appeals of Maryland.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is a requirements contract, in which the quantity of goods to be delivered is determined by the personal business needs of the buyer and credit is extended based on the buyer's character and resources, assignable by the buyer to a third party without the seller's consent?
Opinions:
Majority - Parke, J.
No. A requirements contract based on the personal attributes of the buyer cannot be assigned without the seller's consent. The court reasoned that the contract between Terminal and Frederick was personal in nature. Terminal's obligations were not to supply a fixed quantity of ice, but an amount measured by Frederick's specific needs in his particular business, with which Terminal was familiar. The court emphasized that Terminal had relied on Frederick's personal character, creditworthiness, and financial stability, as evidenced by the extension of weekly credit. To force Terminal to deal with Crane, a stranger with different needs and unknown credit, would materially alter the terms and risks of the original agreement by substituting a new measure of performance and a different credit risk. Therefore, the rights and duties under the contract were so personal that they could not be assigned or delegated.
Analysis:
This case establishes a key limitation on the principle of contract assignability, particularly for requirements and output contracts. It solidifies the doctrine that contracts involving personal trust, credit, or skill are non-assignable because assignment would materially change the nature of the other party's obligations and risks. The decision forces courts to look beyond the mere exchange of goods and consider the "personal equation"—the reliance on the specific identity, character, and circumstances of the contracting party. This precedent has become fundamental in contracts law for analyzing whether a proposed assignment or delegation of duties would violate the original intent and expectations of the non-assigning party.
Unlock the full brief for Crane Ice Cream Co. v. Terminal Freezing & Heating Co.