Ackerman v. Santa Rosa-Vallejo Tanning Co.

HUNT, Circuit Judge (after stating the facts as above). The theory of the plaintiffs in error is that the tanning company refused to comply with the directions of Friedman, made after the second inspection, to ship the leather at once, and that by refusal to carry out such request, or to deliver any other backs until the shipment of 255 backs had heen paid for, it followed that the tanning company broke the contract and became liable for damages for a breach. The argument is that a failure to pay an installment due under the terms of a contract does not avoid the entire contract, or constitute a breach, unless by express terms such failure to pay is made a ground for the termination of the contract, and Cox v. McLaughlin, 54 Cal. 605, is the main decision relied upon. There a contractor brought action for damages for breach of contract for erecting a building, and alleged failure to pay certain installments due under the contract at the time provided for. The court held that such failure did not give plaintiff right to terminate the contract and sue for damages for its entire breach. Upon a later appeal of the same case (Cox v. McLaughlin, 76 Cal. 60, 18 Pac. 100, 9 Am. St. Rep. 164) it was held that the contractor could amend and recover upon a quantum meruit for labor and material furnished, but could not maintain action for damages for breach of the entire contract. Under the later cases in California the earlier decision in Cox v. McLaughlin, supra, is regarded as holding that a mere refusal to pay an installment upon the contract price of an article as it becomes due does not authorize the plaintiff to abandon the work and recover the profits he would, have made if the work had heen completed under the contract. Woodruff Co. v. Exchange Realty Co., 21 Cal. App. 607, 132 Pac. 598; Porter v. Arrowhead Reservoir Co., 100 Cal. 500, 35 Pac. 146. In the recent case of Jensen v. Goss (Cal. App.) 179 Pac. 225, the parties made a contract for purchase and sale of hay, payments to he made on the 13th of each month following delivery. The buyer failed to make the payments as agreed, and the seller refused to deliver. The court held that the seller of the hay was justified in rescinding the contract, when it was shown that there was a clear intention to violate its provisions and to withhold payments due until the delivery of more hay. Minaker v. California Canneries Co., 138 Cal. 239, 71 Pac. 110, was cited to support the rule that plaintiff could not offset any damages for alleged breach by refusal to pay on the ground of a failure to deliver the quality of hay required by the contract without showing performance on his own part of his own agreement. The court said: “It was just as important that payments should be made as agreed upon as »t was that deliveries should be made according to the contract, and when [372] one of the parties flatly declared that it would not pay as agreed, the other party had the right to refuse to further deliver.” [1,2] By the application of these rules, Ackerman & Brummel first defaulted, for on August 22d the tanning company shipped 255 backs of leather in accordance with the terms of. the contract, and invoices were mailed on August 23d, and receipt of the consignment was acknowledged on September 25th. The modified contract, as to terms of payment, was made before the leather was shipped; hence payment was due September 22d, or 30 days after shipment from the tannery. It was on September 25th, however, that Ackerman & Brummel wrote the letter quoted, refusing to carry out the terms of the contract, and announcing their intention to continue to hold back payment until the order was completed. The situation gave to the tanning company the right to stand upon the terms of the contract and to refuse performance until the terms thereof were lived up to. The delayed acceptance by the buyers of the leather that had been once rejected was a waiver of defects in the leather, and of contract requirements as to the quality of the merchandise, and Ackerman & Brummel, having failed to comply with the terms of payment, are not in a position to insist that the tanning company should have proceeded and completed the contract in the manner specified. San Francisco Bridge Co. v. Dumbarton Land, etc., Co., 119 Cal. 272, 51 Pac. 335. [3, 4] In what we have said we construe the mode of payment stated in the contract, “2%—30 days f. o. b. tannery,” to require payment within 30 days of the date of shipment from the tannery, and if paid sooner than the expiration of the 30 days a deduction of 2 per cent, was to be made. Such a construction usually obtains in respect to mercantile agreements where, as a rule, the parties are held to have intended to make time the essence of the contract. Cleveland Rolling Mill v. Rhodes, 121 U. S. 255, 7 Sup. Ct. 882, 30 L. Ed. 920; Jensen v. Goss, supra. We think the District Court was right in its findings, and that its legal conclusion should be sustained. Affirmed.