271 F. 671 | 5th Cir. | 1921
.Plaintiff in error sued to recover judgment for $20,000, which was the par value of stock of the East Oregon Lumber Company purchased by him December 10, 1915, through defendant in error, who at that time was president of. the said company. Judgment was also, prayed for interest at the rate of 8 per cent, per annum from the date of purchase of the stock.
The suit is based upon a promise by defendant in error, contained in a letter written by him to plaintiff in error December 3, 1915, as follows:
“In consideration of this subscription, as I stated to you, should you carry this stock for 24 months, and then desire to dispose of it, I will take it off your hands and allow you 8 per cent, carrying charge. You understand that, should any dividends be paid in the meantime, they would, of course, be deducted from the carrying charge.”
The petition alleges that plaintiff in error, on January 23, 1918, tendered the stock to defendant in error, who declined to accept and pay for it, and further alleges that on June 19, 1918, defendant in
The language quoted - above from the letter conferred upon plaintiff in error an option to. sell. Strictly speaking, it did not create, upon acceptance, a contract of sale or return, for the reason that the East Oregon Lumber Company, and not defendant in error, was the owner of the stock sold to plaintiff in error. The difference is not important, except as it may serve tc distinguish some of the cases relied upon by plaintiff in error. In contracts of sale or return, a reasonable time, after the expiration of the time stipulated for the exercise of an election to return, is usually allowed for physical delivery; but the time within which election to return is required is usually enforced strictly, in both contracts of sale or return and option contracts.
Plaintiff in error contends that in the state of Georgia, where it is claimed the alleged breach of contract occurred, time is not considered as of the essence of option contracts, and relies upon Newburger v. Hoyt, 86 Ga. 508, 12 S. E. 925, mid Rogers v. Burr, 97 Ga. 10, 25 S. E. 239, and thereupon insists that the rule prevailing in Georgia should be adopted as the law of the case;. If the local rule were as stated, it is by no means conceded that it would be controlling in the decision of this case, since the question under consideration is one of general as distinguished from local law. Swift v. Tyson, 16 Pet. 1, 10 L. Ed. 865. However, the cases relied upon by plaintiff in error do not appear to be in harmony with the more recent opinions of the Supreme Court of Georgia, such as Lamed v. Wentworth, 114 Ga. 208, 39 S. E. 855, and Hughes v. Holliday, 149 Ga. 147, 99 S. E. 301. In the case last cited it is said:
“In the case of Lamed v. Wentworth, 114 Ga. 208, 39 S. E. 855, an option contract was under consideration. At page 222 of the opinion in that case it was said: ‘It is peculiarly a' contract of which time is of the essence.’ Because of the one-sided nature of an option contract, time of the election by the optionee is of the essence of the contract in equity as well as in law, whether the contract expressly so stipulates or not. James on Option Contracts, § 862. The failure of the optionee to elect and to give notice of his election within the time limited in his contract, if there be stipulation as to time, and within a reasonable time implied by law in the absence of stipulation, ends his option rights.” '
The allegations in the petition that defendant in error, about six months after the expiration of the option, admitted his liability, and stated that he would be willing to take the stock at that time if he were able to do so, are made the basis for the contention that defendant in error waived or estopped himself from setting up the defense that the option had expired. There was no waiver, because the alleged admission of inability to pay is not at all inconsistent with the defense that there was no liability. Neither does it appear that there was an intention to relinquish an existing right. 27 R. C. L. 908.
We are of opinion that the demurrer should have been sustained, and the judgment is therefore affirmed.