Donlan v. Turner, Dennis & Lowry Lumber Co.

282 F. 421 | 9th Cir. | 1922

HUNT, Circuit Judge

(after stating the facts as above). The position of the- appellants is that, although the District Court was right in holding that the contract, together with the bills of sale, constituted an absolute 'sale and transfer of the title, it fell into error in refusing to hold that they could recover the market value of the lumber destroyed by fire, less advances made by the lumber company on the purchase and the percentages provided by the contract.

We think the construction of the contract as one of sale and transfer of title by Donlan & Henderson to the lumber company was correct. Not only do the provisions of the agreement itself lead to that conclusion, but the acts of Donlan & Henderson, in executing on the same day the bill of sale whereby they bargained, sold, and conveyed to the lumber company all of the lumber then owned by them in pile at Fletcher Spur, make that construction the only reasonable one. Confirmatory evidence is found also in the provision making the sale subject to a vendor’s lien, for unless there was a sale there it was wholly unnecessary to insert such a clause.

Looking into the agreement as one of sale, Donlan & Henderson were: (a) To deliver the lumber f. o. b. cars at Fletcher Spur; (b) to ship and render an invoice with draft; (c) to insure for the benefit of the vendee lumber company. On the other side, the Lumber Company was: (1) To advance to Donlan & Henderson $20 per 1,000 feet as the lumber was piled and stenciled; (2) to market and. sell for the highest price obtainable at the time of sale; and (3) to pay vendors, as the purchase price under the contract, the highest price, less 15 per cent. The parties proceeded in apparent good faith, and the lumber company fulfilled with respect to the advance of $20 per 1,000 feet. A number of cars were shipped before the fire, but after August 3d, the day of the fire, it became impossible for the lumber company to market and sell the lumber.

The contract contained interdependent clauses—the buyer promising to pay the purchase price when it marketed and sold the lumber delivered for the highest price obtainable at time of sale. Payment was then to be made, not of any agreed, fixed price, but the money for which the lumber company sold, less percentages, and less $20 per 1,000 paid and advanced by the seller. Naturally the parties contracted with the idea of the continued existence of the lumber, yet destruction by fire was contemplated, and provision for the protection of the owners was made by making the insurance money payable to the lumber company at $25 per 1,000 feet. The question whether the difference between the advance of $20 per 1,000 and the $25 insurance was the subject of special consideration of the parties before the agreement was drawn is not of vital importance, as it is perfectly plain that the $25 per 1,000 insurance clause was agreed upon and must be upheld in determining the rights of the parties; and the only way to give the clause its expressed meaning is to hold that, if recovery can be had by the lumber company, it is not limited to the sums advanced under the contract, but to the sum named in the contract, $25 per 1,000 feet, payable in case of loss.

The result may be that Donlan & Henderson will have to stand other losses, if any there were; but we are constrained by the definite language used by the parties. However, there is considerable evidence from which it is to be inferred that our construction is but the same as the parties themselves put upon it. For example, Mr. Henderson, of Donlan & Henderson, testified that just before the fire a representative of an insurance exchange called upon him and Solicited more insurance, but that he told the agent he did not care for additional insurance, as his firm expected to take a chance, and could not give it all to the others. He said, also, that he intended to take out more insurance, but failed to do so, and that theywere underinsured.

It is unnecessary to cite authority for the general rule that the loss follows the title, and that a promise to pay becomes fixed upon passing of title. But the rule is not without exceptions, for not infrequently are valid agreements made where the property is in one and the risk in another. It is really a matter of arriving at the intention. of the parties as they have expressed themselves. Here the insurance clause of the contract is proof that in the event of loss by fire $25 per I, 000 was to be paid to the lumber company. The contract discloses on its face that the parties to it contemplated the possibility of fire which would render performance impossible, and accordingly they made provision therefor, and put the risk of loss on one of the parties to the contract. Until the sale by the lumber company, it was under no obligation to pay any more money to Donlan & Henderson. Indeed, as well pointed out by the District Court, conditions might have arisen where the lumber company would receive practically nothing. Suppose the market had fallen to panic prices, and that a sale by the lumber company brought in a sum less than the amounts which Donlan & Henderson owed that company, Donlan & Henderson would have received nothing. That seems clear; and by parity of reasoning, because of the destruction of the lumber, the lumber company is relieved of any obligation to sell and pay over.

In The Tornddo, 108 U. S. 342, 2 Sup. Ct. 746, 27 L. Ed. 747, the court recognized that there are cases which fall within a rule that, where the stipulations of the contract are interdependent, defendant cannot be sued for the nonperformance of stipulations on his part which were dependent on conditions which the plaintiff has- not performed. The court cited Taylor v. Caldwell, 3 Best & Smith, 826, to the effect that, in contracts in which the performance depends on the continued existence of a thing, a condition is implied that the impossibility of performance arising from the perishing of the thing shall excuse performance. The reason for that rule is that the law implies excuse because, from the nature of the agreement, it is clear that the parties have contracted on the basis of the continued existence of the particular person or chattel. See, also, Elgee Cotton Cases, 22 Wall. 180, 22 L. Ed. 863; Frank et al. v. Butte & Boulder Min. Co., 48 Mont, 83, 135 Pac. 904; Calcutta & Burmah S. S. Co. v. De Mattos, 32 L.

J. Q. B. N. S. 322, 33 L. J. Q. B. N. S. 214; Dexter v. Norton, 47 N. Y. 62, 7 Am. Rep. 415; Taylor v. Caldwell, supra, 113 E. C. R., 824; Fragano v. Long, 107 Eng. Rep. 1040; Benjamin on Sales, pp. 409, 410; Mechem on Sales, § 1100; Williston on Sales, § 302.

Cases in which the agreement is that the purchase price becomes payable at once, but is to be determined by counting or measurement, osthe doing of Such acts, are to be distinguished. In Noyes v. Marlott, 156 Fed. 753, 84 C. C. A. 409, everything that the vendors had to do with the logs was completed when delivery was made at the place designated. There was no condition in the sale, and the only interest which the vendors had after delivery of the property was in recovering the price agreed -upon as soon as the measurements were ascertained by the purchaser.

After careful consideration of the case, our conclusion is that the District Court properly construed the contract, and that the decree must be affirmed.

So ordered.