This action was originally brought in the state circuit court for the county of Genesee, in Michigan, and removed by the plaintiff in error, who was defendant below, into the circuit court of the United States for the eastern district of Michigan. The defendant in error sued as assignee of Merritt & Helme, partners as J. J. Merritt & Co., who were assignees of J. J. Merritt, upon a certain contract entered into between him and the Standard Oil Company, and subsequent modifications thereof, to recover a balance alleged to be due thereon on account of the price of certain headings for oil barrels sold and delivered in pursuance thereof.
By the original contract, dated October 4, 1873, Merritt, described as of Lapeer, Michigan, sold the Standard Oil Company 2,000,000 heading suitable for oil barrels, to be sawed 22 inches in length, full one inch thick on sap, and full one-half inch thick on the heart edge, and whenever more than two pieces are required to make a head the same shall be counted as two; to be delivered on board the cars at Cleveland, Ohio, on or before March 1, 1875, subject to the count and inspection of the Standard Oil Company, who agreed to receive and pay for the same as fast as inspected at the price of $40 per thousand. Merritt also agreed that full one-half of the whole amount of the heading should saw full two-pieced heading, and the Standard Oil Company agreed in that case, and if the other half were not more than three-pieced heading, they would pay an additional one dollar per thousand on the whole amount. It was further agreed that Merritt should have the privilege of drawing, on sight drafts, for $25 per thousand, through bank, accompanied by duplicate bill of lading signed by railroad company, as evidence of shipment, and that the cars should be so loaded as to have a net value in Cleveland of amount of draft after culling and paying freight.
This contract was modified by a supplemental agreement of April 1, 1874, Helme then becoming a party to it, by which it was stipulated that Merritt & Co. should make and deliver the heading, properly piled on land in Lapeer controlled by the Standard Oil Company; the latter to furnish a man to count the heading as nearly as might be from week to week as piled, but not to inspect it, the object of the count being to obtain an approximate estimate of the heading thus piled, in order to determine from time to time the amount of advances to be made thereon; but thereupon the delivery of the heading so counted should be deemed complete, and the heading should then become the property of the Standard Oil Company absolutely, Merritt & Co. being entitled to draw upon certificates of such counts at the rate of $20 per thousand, on which advances the oil company were to be allowed interest at the rate of 10 per cent. per annum until the heading should be received at Cleveland, and also to charge the cost of insurance thereon to the amount of $21 per thousand; the loss by fire, if any, above that amount to be borne by Merritt & Co. In all other respects the terms of the original contract were to govern.
On May 29, 1874, another modification of the contract was made, which recited that 'through an error made by the inspector, employed by said Standard Oil Company, the said J. J. Merritt & Co. have received from the said Standard Oil Company money in excess of the amount' which, under the contract, they were entitled to receive, amounting to about $2,500, and made certain provisions as to the time and mode in which it should be refunded, but otherwise left the contract unchanged.