90 F.2d 965 | 2d Cir. | 1937
This is an appeal by the defendant from a judgment for $550,610.71 in an action for damages for breach of contract. By stipulation the case was tried before the court and a jury of one, each side moving for a directed verdict. The plaintiff’s motion was granted, and judgment was entered in accordance with the verdict directed.
In the summer of 1927, T. W. Warner Company (for brevity called Warner) entered into a written contract with Andrews, by which Warner was to sell, and Andrews was to buy, certain preferred and common shares of Peerless Scale Corporation. The contract was made in California, and the stock certificates, indorsed in blank, were
Andrews, on the other hand, now wanted to get the stock. On June 7th he attempted to tender payment for it and, subsequently, through an assignee, sued Warner for breach of the contract to sell it.- The tender was held ineffectual, and the complaint was dismissed in Welch v. T. W. Warner Co., 47 F.(2d) 232 (C.C.A.2). Andrews also attached the stock in the hands of Warner’s New York broker, thereby preventing its sale; and this attachment resulted in an action by Warner for malicious abuse of process, which also reached this court. T. W. Warner Co. v. Andrews, 73 F.(2d) 287 (C.C.A.2), cert. denied 294 U.S. 717, 55 S.Ct. 515, 79 L.Ed. 1250. While the stock was under attachment, the Peerless Scale Corporation, whose corporate name had been changed to General Vending Corporation, went into a merger referred to as the “Cameo” deal; and, when the attachment was released, Warner exchanged his stock for Cameo escrow certificates, in the belief either that he could do nothing else with it, or that he could secure a better price for it by going into the Cameo merger. But, when the escrow certificates were replaced by Cameo stock in 1929, the stock was of little value.
The present action was commenced March 17, 1931. The complaint was drawn as a suit for damages for breach of an ex-ecutory contract of sale. It incorporated the agreement, alleged completion of the Peerless refinancing on December 13, 1927, the falling due of the installments of the purchase price on October 19, November 18, and December 18, 1927, the failure of Andrews to make the payments as agreed and that “at the time of such default" the stock had no market price, was unsaleable, and without value. The answer was a general dpnial. Upon the trial, however, the evidence took a much wider range than the issues as framed by the pleadings. No evidence was offered as to market value or actual value of the stock at the time of default alleged, but the proven facts were thought to establish that title to the stock passed to Andrews prior to June 7,1928, and the correct measure of damages- was held to be the purchase price. The plaintiff was allowed to amend the pleadings to conform to the proof, and this was assumed' to have been done without formal pleadings b'eing filed.
Several of the appellant’s contentions with respect to the invalidity of the contract can be disposed of summarily. (1) The argument that it was an option, not a contract for purchase of the stock, is- contradicted both by the language of the writing of July 22, 1927, and by the admissions of Andrews’ answer to the complaint. (2) Nor can it be successfully contended, that there was no consideration for Andrews” promise to buy because Warner reserved the power of withdrawing the stock, if the first in
It is urged that Warner failed to prove that the condition precedent to Andrews’ obligation to pay was ever performed. On this question of fact the trial court found against the appellant. There is ample to sustain the finding. It is conceded that the new Peerless bonds were offered to the public on October 4, 1927 and that on December 13, 1927, Andrews received payment of his Peerless notes. On the same date Andrews loaned $1,350,000 to Lisman & Co. and it is claimed that this was a modification of the Peerless refinancing which prevented its completion on December 13th. The District Court found that this was a separate transaction. Mr. Lisman so testified. Moreover, Andrews’ affidavits in the prior litigation admitted that the “refinancing deal was completed.” But, even if repayment of the Lisman loan were deemed essential to complete the Peerless refinancing, it would make little difference, for the loan was all repaid to Andrews by April 19, 1928. In any event, therefore, as stated in the District Court’s opinion, Andrews was bound to pay for the stock, if not in December, 1927, then at least in April, 1928.
When a purchaser defaults for an unreasonable length of time in his obligation under a contract of sale, the seller may choose between three remedies : (1) He may hold the goods for the buyer and sue for the purchase price; or (2) he may sell as agent for the buyer and sue for the difference between he gets and the contract pnce; or (3) he may keep the goods for himself and sue for the difference between the contract price and the market value at the time and place of delivery, which in the case at bar was, as we think, December 18, 1927, or, in any event, not later than April 19, 1928. Krauter v. Simonin, 274 F. 791, 793 (C.C.A.2); Dustan v. McAndrew, 44 N.Y. 72; Gay v. Dare, 103 Cal. 454, 458, 37 P. 466; Williston, Sales, §§ 554-556. The District Court’s opinion states that Warner’s complaint is based on the theory of the first of the above-mentioned remedies. With this we cannot agree. When he obtained the stock from the Pasadena bank and sent it to New York for sale, he elected to keep the slock and sell it for his own account. Clearly 'he was not holding the • stock for the buyer, as in Hughes Mfg., etc., Co. v. Elliott, 178 Cal. 181, 172 P. 584, where it was left with the escrowee subject to the buyer’s order. Nor was he purporting to sell as the buyer’s agent. This is made very clear by the closing sentence of his attorney’s letter of June 7th to the effect that “said agreement has been fully terminated and is of no further force and effect.” Indeed, Andrews argues that this letter terminated the rights and duties of both parties under the contract. But, as it was a voluntary statement without consideration, it cannot, of course, operate as a release of Warner’s right of action for an existing default. Prior to that notice Andrews could have cured his existing default by paying the contract price of the stock, as Warner had repeatedly urged him to do. The notice terminated this privilege and left the seller with the remedy the law gives when the buyer has defaulted and the seller has elected to keep the goods. So the present suit must be considered, as the pleadings disclosed, an action for damages based on the difference between the contract price and the value of the stock when the defendant defaulted. As such the judgment cannot be sustained, for no evidence whatever was offered to prove the market value or the actual value of the stock when the breach occurred, whether it be in December, 1927 or April, 1928.
Accordingly the judgment is reversed and the cause remanded.