227 F. 16 | 7th Cir. | 1915
(after stating the facts as above).
In our judgment, however, the course of dealing evidenced, not a modification of the agreement, but a reduction by the lessor from month to month of a part of its claim — a reduction made in consideration of the payment before maturity. A course of conduct of this kind might prevent the exercise of a reserved right of forfeiture until due notice had been given that such right would thereafter be strictly enforced. It would not, however, affect the contractual, obligation itself. A lessor can allow a discount not provided for in the lease, or contrary to the terms thereof, with or without consideration, for as many successive months as he desires, without thereby obligating himself to continue the allowance for any time thereafter.
The apparent contradiction between the debt being due at the end of one month and suable because payable only at the end of the following month is avoided, and the obvious intention of the parties given full effect, if the word “due” be given its secondary meaning of “owing” (United States v. Bank, 6 Pet. 29, 8 L. Ed. 308; 3 Words and Phrases, p. 2213), instead of its more usual, but in this instance impossible, meaning of “owing and now payable.” So .interpreted, the lease is perhaps distinguishable from that considered by the court in Goodyear Co. v. Selz, Schwab & Co., 157 Ill. 186, 41 N. E. 625, in which it was held that only the net amount was the real debt; the other 50 per cent, being an unlawful penalty. There the royalties were expressly due and payable, not on the last, but on the first, day of. the succeeding month, “and to be paid within one month from that day.” The 50 per cent, discount was to be given “if the royalties due on the 1st day of any month shall be paid on or before the 15th day of that month.” If, however, the words “to be paid within one month from that day” make the debt payable only a month thereafter, then the case cannot be distinguished.
We are not dealing- with a loan of money for the use of which no more than legal interest can lawfully be demanded: Here the parties were empowered to fix the rentals at such sum and payable at such times as they deemed best. Having agreed thereon, they could further provide for any discounts based on payment before maturity. A
While the intent of the parties determines what the actual debt is, and whether the larger amount includes a penalty, or the smaller amount is the result of a discount, that intent is to be found primarily from the language of the contract itself. No evidence of any kind has been introduced tending to show that the parties had in fact agreed upon the smaller amount as the actual rental, and that they, or the lessor, through some monopolistic power or otherwise, caused the real agreement to assume its present form for the purpose of concealing, instead of expressing, the mutual intent. In the absence of any such proof, the court would he substituting the contract that it thought the parties ought to have made for the one in fact made by them, if it held that to be a penalty which the parties, free to con-, tract on any mutually agreeable terms, decided should be a true discount.
We are in complete accord with the Court of Appeals for the Eighth Circuit, which, after careful consideration both of the authorities and the principles involved, reached the same conclusions in respect to an identically similar lease. United Shoe Machinery Co. v. Abbott, 158 Fed. 762, 86 C. C. A. 118.
The order allowing the claim reduced by 50 per cent, of the royalties will he reversed, and the cause remanded, with directions to allow the full amount of the royalty claims.
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